The Reserve Bank of India (RBI) Deputy Governor, K. C. Chakrabarty, on Friday said that banks’ lending rates to certain segments such as short-term corporate loans could go up owing to the mis-pricing, but felt that overall rates would be stable.
“Overall interest rates will remain the same... (However) segments, where interest rates are mis-priced, you could see some increase...like in short term corporate loans,” Mr. Chakrabarty told reporters here.
Banks generally lend to potential customers, primarily corporate clients, at much lower rates below their benchmark prime lending rate (BPLR), which is often termed as sub-PLR rates.
The apex bank, exiting from its easy money regime, upped the cash reserve ratio, amount of money banks have to keep with the RBI, by 75 basis points last month.
The banking system has enough liquidity to fund the infrastructure sector over the next 2-3 years, he said, however, adding that in the long-term the corporate bond market would have to be developed to meet the huge investment demand.
