Parekh sees interest rates falling

Parekh sees interest rates falling
The Economic Times, February 18, 2009, Page 10

Our Bureau NEW DELHI

HOUSING Development Finance Corporation chairman Deepak Parekh on Tuesday said the Reserve Bank of India (RBI) may take some more steps to bring down lending rates in the market. He also said that HDFC, the country’s biggest housing finance company, would cut interest rate as and when its cost of funds comes down.

“We are reviewing the rates every day and will bring down the rates if the cost of funds comes down,” Mr Parekh said on the sidelines of an event here. He said there was enough liquidity in the banking system that could help banks in bringing down interest rates.

“Banks are funding (parking) Rs 40,000 crore to Rs 60,000 crore with the RBI under the reverse repo window. (This means) there is enough liquidity in the system and that is why there is a likelihood of interest rates coming down,” he said.

Mr Parekh hoped the RBI would take more steps as inflation had fallen below its targeted level of 5%. Wholesale price-based inflation for the week ended January 31 eased to a one-year low of 4.38%.

The central bank has cut its key lending rate by 350 basis points since October to 5.5% and also reduced the cash reserve ratio by 400 basis points to 5% to lower borrowing costs and prod banks to step up lending to sustain economic growth.

“We are hoping that since inflation numbers are down the RBI will take some steps. May be not immediately, but in near future,” he said. Mr Parekh also acknowledged the real estate market was witnessing correction in terms of pricing due to the pressure on availability of finance.