'Growth slowdown likely if interest rates remain up'

MUMBAI: The country's GDP growth could experience a slowdown if interest rates continued to rise or stayed at the current levels, ICICI Bank chief K V Kamat has said.

"If rates continue to rise or stay where they are, there is a possibility of a slowdown," ICICI Bank Managing Director K V Kamath told reporters, hinting that interest rates were at elevated levels.

He, however, maintained that anecdotally there has been no change in course of the Indian corporates as of now. "We have not seen any projects being pushed from the front burner to the back burner, at least anecdotally," Kamath said.

When asked on the interest rate outlook, Kamath declined to speculate on the future action of the Reserve Bank. "We have a uni-dimensional context but any action by the regulator would be only after considering all aspects," he said.

On the retail front, Kamath observed that while risk remains within mapped areas, the issue was of affordability of mortgage or vehicle loans.

"Customers are now becoming careful in taking a decision on a home loan with 12-13 per cent interest rate or a car loan on 15 per cent interest rate," he said. On the effect of global situations on Indian companies, Kamath said that while there was no impact on outbound mergers and acquisitions, some repricing may happen.

Internationally, risk pricing has gone up by 0.25-0.5 per cent but it was for the corporates to decide if they were comfortable with it, he said adding the bank has as of now seen no change in fresh investment plans.

On availability of global capital to Indian companies, Kamath said that while there was no sign of pressure on profitability but it has to be watched.