"Interest rate will remain stable in the short term," A K Purwar, chairman, State Bank of India said after a meeting of bankers with Finance Minsiter Chidambaram in New Delhi on Friday.
Union Bank of India chairman K Cherian Varghese said interest rates should come down as Finance Minister has made a statement that government's borrowing will be lower than indicated in the budget. "So, we expect bond prices to firm up and interest rates to come down," he said.
IDBI chairman V P Shetty said interest rate scenario is steady now and there is no reason to firm up lending rates even if the yields on government securities goes up by 0.25 per cent in the next six months.
"Liquidity is high and there are more funds with banks as of now. So, the interest rates will stable even if the 10-year government paper hovers at about 6.92-7 per cent," he said.
While maintaining that rates were stable now, Corporation Bank chairman V K Chopra said interest may slightly harden in the near future.
The stable interest rate outlook of bankers comes after Chidambaram said on Thursday that Centre would cut fiscal deficit at less than 4.1 per cent of GDP and subsequently lower borrowings at less than that budgeted for 2005-06.
"Both by design and compulsion this year's borrowing will be less than indicated," he said referring to last year's fiscal prudence in bringing down fiscal deficit to 4.1 per cent of GDP as against revised estimate of 4.5 per cent.
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