Deutsche Bank today said there will be an upward pressure on interest rates, but the hike may not be more than a 100 basis points in the first half of the next fiscal.
"I do believe there will be an upward pressure on interest rates but that pressure maybe of 50 to 100 bps over the next few quarters (next fiscal's first and second quarter)," Deutsche Bank (India) CEO Gunit Chadha told reporters on the sidelines of Mindmine Summit 2010.
"It is not going to be more severe than that," he added.
Interest rates have come under pressure as the Reserve Bank of India has raised the amount banks have to keep with the apex bank by up to 0.75 points to suck out excess liquidity from the market.
Further, Chadha said he was confident of a rebound in credit growth in the country in the next financial year from the current level of about 16 per cent to around 20 per cent.
"It's our Deutsche Bank analyst's view that 2010-11 will see credit growth of 20 per cent per annum," he said.
Credit growth of banks rose by 15.5 per cent at Rs 31.78 lakh crore for the fortnight ended February 26.
This is the highest growth in the past few fortnights and has raised expectations that it could breach the Reserve Bank's projection of 16 per cent by March-end.
In the same period last year, credit growth stood at around 20 per cent.
On January 29, RBI, in its third quarter review of the monetary policy, had projected credit growth at 16 per cent.