02 May 2008 | 09:53
FM expects state-run banks to hold rates
Finance Minister (FM) P Chidambaram on Thursday, 1 May 2008, said state-run banks are unlikely to hike interest rates in the near future. FM said banks were quite happy that only the CRR (cash reserve ratio) has been raised by the Reserve Bank of India and policy rates have been untouched. RBI on Tuesday, 29 April 2008, hike CRR by 25 basis points to 8.25% in its annual monetary policy review.
Chidambaram said with lower provisioning requirement for housing loans up to Rs 30 lakh announced by the RBI in its monetary policy review, the housing sector can expect higher credit flow without impacting interest rates.
The finance minister also asked banks to review their derivatives portfolio and suggested that they should stay away from exotic instruments in the absence of clarity.
Chidambaram said he expects the public sector banks to perform better in both credit and deposit growth in 2008-09.
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