Scope to cut rates going ahead is very limited, says HDFC's Keki Mistry
If you see the lowest interest rates, the lowest repo rate we have had in years and years has been 4.75 percent. We are now at 5.15 percent. So the scope to cut rate going forward is very limited, said HDFC's Keki Mistry.
Keki Mistry, vice chairman and CEO of HDFC and Shyam Srinivasan, MD and CEO of Federal Bank shared their views and outlook for business and the RBI decision of no rate cut in their monetary policy.
On the rates Mistry said, “I am not personally surprised that there was no rate cut. I did not believe there would be a rate cut. If you see the lowest interest rates, the lowest repo rate we have had in years and years has been 4.75 percent. We are now at 5.15 percent. So the scope to cut rate going forward is very limited. Therefore, the MPC would wait and then do the rate cut."
However, Srinivasan said, "Like many I was also surprised and probably thought 25 basis points (bps) cut was given but going through the explanation it seems like a fairly sensible decision given all that we are seeing in the economy. I want to believe that it is only a pause and it is not a permanent stop.”
“I generally carry the view that interest rate is only one of the many things that goes into ones decision-making, nobody buys a home just because it is a few basis points cheaper. At this point in time, given everything that we have read, seen and heard, maybe our call of rate cut was probably a little ahead of itself," said Srinivasan, adding that it was not a permanent pause. "I would believe that if not February, post the budget there will be some kind of rate cut,” he mentioned," he further noted
On the business front, Mistry said, “I think the structural demand for housing is very strong. My sense is that the kind of demand that we have seen in housing loans over the last 30-40 years, will continue for a long time to come, maybe another 20-30-40 years."
"Penetration levels are low, housing is affordable, government has given a lot of incentives and the demographics are such that structural demand for housing will always be high,” Mistry added.
When asked about if the next-gen private sector banks or the midcap banks are poised to take leadership and become largecap banks, Srinivsan said, “I think this is the era of the private sector banks -- midcap private sector banks, in particularly for Federal, we have a remarkable opportunity."
"If there are businesses like housing that are growing, which means underlying consumption, underlying market is growing in the right direction, banks like us and many of the private sector banks which have repositioned themselves and have built capabilities to match the best, the opportunity is remarkable. I cannot believe why the growth won’t be manifold,” Srinivasan added.
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