M.R. Nayak, executive director at Allahabad Bank, a state-run Indian lender, comments on lending and deposit rates after the Reserve Bank of India today raised its benchmark repurchase rate to 7.5 percent from 7.25 percent.
“Credit growth among retail clients is likely to slow, especially vehicle and housing loans. Since this is repo rate increase, the impact will be known only after 35 to 40 days.
‘‘I don’t think there will be further increase in lending or deposit rates as credit demand is not up to the mark. Deposit rates may stabilize or even come down. If cash reserve ratio rate goes up, then banks may think of increasing lending rates.
‘‘Economic growth will stabilize at about 8.25 percent to 8.5 percent because agriculture growth was good last year. It is likely that agriculture sector is driving growth for India.’’