State Bank of India and ICICI Bank, two of India's largest banks, on Tuesday said that there would be no immediate hike in interest rates due to the Reserve Bank of India's decision to increase the cash reserve ratio in banks to curb inflation.
"We still have liquidity that is so strong in the system. As a result, I don't see this causing any immediate shock in the interest rates. I don't see any movement either way," ICICI Bank, managing director and CEO K V Kamath told reporters on the sidelines of the banking conference, organised by Federation of Indian Chambers of Commerce and Industry.
SBI Chairman A K Purwar earlier said that there were no immediate fears of any interest rate hike. He said there would also be no change in deposit rates.
Kamath said the regulators were taking steps to curtail the rising inflation in the country. "Demand is constant, there was liquidity and that liquidity was being deployed into government papers. It is now taken into CRR," he said.
Stating that demand for credit was 'excellent', Kamath said: "There is a huge pipeline of investments that companies are looking in the next 18 to 24 months."
"The pipeline of investments with the companies is to the order of Rs 20,000 billion," he said.
Kamath said investments projects in the real (manufacturing) sector of the country was 'looking exceptionally good' at this point.
"Investment for these projects in the pipeline (will be from), part of it from cash reserves, part of it from the banking system and part of it from the capital markets," he said.
Kamath ruled out any plans by India's second largest commercial bank for acquisition. "We have said it earlier. We are not in consolidation mode. We are not looking at any targets," he said.
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