IBA chief expects RBI to lower interest rates

Most banking industry insiders are of opinion that the Reserve Bank of India (RBI) should reduce interest rates, keeping in the liquidity in the market.

Indian Banks' Association (IBA) Chairman M B N Rao echoed these popular sentiments. He was quoted as stating that interest rates may reduce now; but inflation needs to be taken into consideration.

According to Rao, the credit-deposit (CD) ratio is 49-50 per cent and with deposits growing at 29.5 per cent as on January-end, there is sufficient liquidity in the market.

Speaking about the possibility of rate cuts by banks, the chief said that the interest rates have to be decided by banks based on their own asset-liability positions.