State Bank of India (SBI) chairman Dinesh Khara expects lending rates to fall from the middle of next calendar year, driven by decline in inflation. “I expect that somewhere in the middle of next calendar year we should get to see reduction in interest rates.
“We are in the right trajectory because inflation is much under control,” he said speaking at the 10th SBI Banking & Economics Conclave. After remaining firm in the past couple of years, interest rate cycle is expected to turn next year with experts hoping the Reserve Bank of India to cut repo rate next year.
The RBI has forecast retail inflation falling to 5.7% in the December quarter, cooling further to 5.4% in fiscal 2024. Chairman Khara said that the Indian economy has moved from strength to strength over the last years. The banking sector has displayed phenomenal resilience highlighting the performance of banks during financial year 2023 and the first half of 2024.
“The Indian economy has continued exhibiting robust resilience during the current year too, building upon the momentum initiated during 2022-23, notwithstanding the global turmoil as escalating multiple footprints of geopolitical tensions threaten to change the terms of trade, clocking growth rate of 7.7 per cent in H1 FY23-24, the highest among major economies in the world,” he added.
Falling non performing assets of banks and strong balance sheets of companies will fuel the economic growth he said.”The twin balance sheet advantage seems truly the new normal for underpinning the holistic economic growth that permeates the horizon like never before,” he added.