Corporates expected Reserve Bank to intervene in the next 6-12 months to suck out excess liquidity from the banking system, which meant increase in key-short term rates, a J P Morgan survey said on Wednesday.
The apex bank’s intervention could also happen in the next 3-6 months exerting more pressure on banks to hike rates in the near future, it said. The survey also said that non-performing assets of banks in the system are likely to increase in the medium term.
“Thirty-six per cent of the corporate respondents expect RBI to intervene in the medium term. As a corollary, 28 per cent of all respondents feel that interest rates are set to harden within the next 6-12 months”, the survey, prepared by J P Morgan Asset Management and Valuenotes, said.
Corporates also expected their profits and employment opportunities to improve with an expected recovery in the medium term. The survey — investment confidence index, was conducted among respondents from corporate and retail segments in eight Indian cities in July and will be published on a quarterly basis.