HDFC may raise deposit rates by 50 basis points

HDFC may raise deposit rates by 0.25-0.5 per cent next month.

Speaking on the sidelines of an AIMA summit in Kolkata on Thursday, HDFC chairman Deepak Parekh said there was a possibility of lending rates going up, as the cost of deposits was rising.

"If one has to pay more on deposits, the lending rates have to be increased, whether it is auto, housing or cash credit. But the rates will rise marginally, by a quarter or half per cent," he said.

On being asked if there was any possibility of a further rise in deposit rates in October, Parekh said, "Yes... by a quarter or half per cent."

According to recent data by the Reserve Bank of India, deposits grew 14.78 per cent year-on-year during the fortnight ended September 10, whereas credit grew 19.76 per cent.

Parekh said the liquidity situation was expected to improve by October-November. "In September-October,

we will see some borrowing by banks. But by October-November, it (liquidity) will come back," he said.

He added the government borrowing in the second half would not be hampered due to robust advance tax collections and funds from 3G and broadband auctions.

RBI increased repo rate and reverse repo rates by 25 and 50 basis points to six per cent and five per cent, respectively, in its mid-quarter policy review last week.

"RBI is also aware that among the emerging economies, we have one of the highest interest rates. We just can't keep on increasing rates. But inflation is worrying India more than the other countries," said Parekh.