Six leading bankers say the overall mood on economic growth is fairly bright, but the early signs of stress can’t be ignored.

ON RATE HIKES. WILL THEY BE PASSED ON?
Pratip Chaudhuri: Any hike by the Reserve Bank of India has to be passed on because any input prices rise will have to be reflected in the asset side, in terms of returns.

Chanda Kochhar: It will depend on the liquidity situation. In the last two years, all rate hikes by RBI were passed on by banks. But the last one has not really been passed on because of low credit offtake and higher deposit growth rates. The big thing to watch in the coming two months will be liquidity because we are entering the festive season, the rupee-dollar is moving in a particular manner and it is having an impact on rupee liquidity. There is a lot of borrowing in India from the European banks. There could be some liquidity crunch on that account as well.

Gunit Chadha: Historically, the second half of the financial year has always been worse than the first half. Some of the factors that are in the play right now, are an increase in government borrowing, reduced dollar liquidity and cutback in the flows into India. Then, there is the whole issue of transmission. I think there is an inevitability that banks will have to transmit some of this increase into the system.

M D Mallya: Credit demand has continued to be a little muted. We are still to see the normal increase after the onset of the festive season, implying that credit delivery has not taken place substantially. For more visit: Business Standard

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