subject: Indian banks deposit growth covering, may impact liquidity: HDFC [print this page] sheath growth in Indian banks' deposits despite recent hike in interest rates could further impact liquidity, a top banker said here on Friday.
"Reserve Bank of India's (RBI) target for deposit growth this year is 18 per cent, but actually it is lagging behind at 14 per cent or so," executive director of HDFC Bank Paresh Suthankar who was here for an event said.
"So if you look at loan growth of 20 per cent and deposit growth of 14-15 per cent, then there is a fair expectation that liquidity will remain a little tight in the system," he said.
"So far in this financial year from April till now the deposit rates have already gone up by 25 to 50 basis points, but no major impact is visible," Suthankar said.
With RBI maintaining tight monetary policy to check inflation and due to a mismatch between loan and Fixed deposit growth, the liquidity will be a concern, Suthankar said.
"Perhaps it would be clearer in next 2-3 fortnights when we will have some visibility and whether higher deposit rates have made some impact on the system," he said.
Suthankar said there is room for an overall hike of 50-75 basis points in key rates during the rest of the fiscal year.
"So if you look at loan growth of 20 per cent and deposit growth of 14-15 per cent, then there is a fair expectation that liquidity will remain a little tight in the system," he said.
"So far in this financial year from April till now the deposit rates have already gone up by 25 to 50 basis points, but no major impact is visible," Suthankar said.
With RBI maintaining tight monetary policy to check inflation and due to a mismatch between loan and Fixed deposit growth, the liquidity will be a concern, Suthankar said.
Indian banks deposit growth covering, may impact liquidity: HDFC
By: Bhavana Jhingan
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