Tightening of key policy rates won’t affect growth: Kamath

ICCI Bank chairman K.V. Kamath on Tuesday said even if there is a tightening of policy rates, companies will be able to source finance and manage expansions from other sources such as internal accruals and growth would not be affected.

Amid speculation that the RBI may soon take measures to suck out liquidity from the system to contain inflation, he said strong internal cash accruals and a buoyant equity market were providing the necessary funding to companies.

“Even if there is a tightening (of policy rates), I think they (corporate houses) would manage because the flip side of this is that today you are seeing a lot of liquidity which is despite the sort of growth that we are getting,” Mr. Kamath said.

He said firms are now looking at banks as just a supplement route for raising finance.

“Corporate clients are on their growth path on their own because they are facilitated by very strong internal cash accruals and a very buoyant equities market which is giving them all the funding resources they want,” Mr. Kamath told reporters on the sidelines of a meet here.

Growth would continue to take place, he said, adding “we should keep our eyes on our intent to invest and whether actual investment is happening or whether we are straying away from that.”