Interest rates may rise soon: Bankers

Bankers on Tuesday said interest rates have bottomed out in the second quarter and rates may start rising in the coming months in line with a pick-up in credit off take, expected on the back of a revival in the economy.

"Lending rates have bottomed out in the second quarter... gradually rates will harden...from here credit off take will pick up very gradually and the increase (in rates) will be in line with the pick-up in credit off take," ICICI Bank managing director and CEO Chanda Kochhar told reporters on the sidelines of a FICCI-IBA Seminar in Mumbai.

With builders correcting housing prices, demand has returned in the home loan market, Kochhar said. However, demand continues to be low in those quarters where correction is yet to happen, she said.

IDBI Bank chairman and managing director Yogesh Agarwal said that lending rates in the industry have bottomed out and rates may move north wards post-Diwali.

"Interest rates have bottomed out (in the banking industry) ...it should go up post-Diwali," Agarwal said.

Despite the challenging market conditions, IDBI Bank has not seen any pressure on its net interest margins in the second quarter, he said.