Hike in lending rates not likely: Avinash Gupta
In the wake of surge in deposit rates, Avinash Gupta, Asst VP Research Equity, Bonanza Portfolio Ltd. shares his response with ET Now.
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| Avinash Gupta, Asst VP Research Equity, Bonanza Portfolio Ltd
What do you make of this increase in deposit rates, the CRR hike just happened a while ago, so in that sense a balance between lending rates and the deposit rates... do you see lending rates also rising?
Well, the lending rates are not expected to rise and that's just what we are hearing from most of the bank chiefs but the fact that the deposit rates are going up means that the bank side is in need of funds and therefore, some of the banks are facing good credit traction due to which they are trying to attract the funds so that they can lend more. To that extent, these banks may be on a better wicket in terms of improvement in margins because in the past they have been facing the problem of not having enough credit demand.
How likely is the capitalisation of the small PSU banks in this Union Budget, considering that they have to meet their growth requirements?
You see, they are in a very interesting position, they have got a lot of exposure in the rural market and rural areas having lot of traction. Therefore, the banks will be able to garner lot of deposits and will also be able to lend out much more. Capitalisation, yes, the banks will need to raise more capital but many of them are not in a very uncomfortable position.
What do you make of this increase in deposit rates, the CRR hike just happened a while ago, so in that sense a balance between lending rates and the deposit rates... do you see lending rates also rising?
Well, the lending rates are not expected to rise and that's just what we are hearing from most of the bank chiefs but the fact that the deposit rates are going up means that the bank side is in need of funds and therefore, some of the banks are facing good credit traction due to which they are trying to attract the funds so that they can lend more. To that extent, these banks may be on a better wicket in terms of improvement in margins because in the past they have been facing the problem of not having enough credit demand.
How likely is the capitalisation of the small PSU banks in this Union Budget, considering that they have to meet their growth requirements?
You see, they are in a very interesting position, they have got a lot of exposure in the rural market and rural areas having lot of traction. Therefore, the banks will be able to garner lot of deposits and will also be able to lend out much more. Capitalisation, yes, the banks will need to raise more capital but many of them are not in a very uncomfortable position.
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