'Interest rates moderating'

Top bankers today said interest rates have started moderating after rising for over a year.

"I believe interest rates are moderating," said K V Kamath, Managing Director and Chief Executive Officer, of country's second largest lender ICICI Bank.

Punjab National Bank has also expressed a similar opinion. "With inflation coming down, there will be pressure on banks to reduce deposit as well as lending rates in the next two months," PNB Executive Director K Raghuraman said.

Inflation has come down to 5.44 per cent from a peak of 6.7 per cent this year after government and the Reserve Bank of India took fiscal and monetary measures respectively.

If interest rates continue to rise, they can put pressure on the economy, Kamath said, adding, "I believe economic fundamentals in India are strong."

Lower credit demand in slack season and balanced attitude by RBI to maintain adequate liquidity, are also likely to contribute to the moderation of interest rates. The prime lending rates of banks in India have gone up from 9-11 per cent to 11-13 per cent in the last one year.

Raghuraman expressed concern over rising rupee as it may hurt economic activity.