Punjab National Bank (PNB), the country's second largest public sector lender, on Friday said that interest rates will start coming down by next year even though the Reserve Bank of India indicated that it will continue its hawkish stance.
"Interest rates seem stable for some time now. We expect the interest rates will start coming down after March," PNB Chairman and Managing Director K C Chakrabarty said on the sidelines of a function.
The banking regulator said in its Currency and Finance report for 2006-08 that "it is critical at the prevailing juncture to demonstrate on a continuing basis a determination to act decisively, effectively and swiftly to curb any signs of adverse developments in regard to inflation expectations."
Inflation which is reining over 12 per cent is still way above the RBI's projection of 7 per cent by the end of current fiscal.
The Reserve Bank has in phases raised the cash reserve ratio and reserve repo rate to 9 per cent to tame rising inflation. It last hiked the repo rate by 50 basis points and cash reserve rate by 25 basis points in its monetary policy review on July 29.
Following the subsequent hike of key rates, all commercial banks including State Bank of India, ICICI Bank, HDFC Bank, Punjab National Bank and Bank of Baroda increased their benchmark lending rates.
The prime lending rate of most public sector banks was increased to 14 per cent.