Private sector lender Axis Bank is likely to raise deposit rates shortly, after Reserve Bank of India raised key rates yesterday. However,the bank expects the credit growth to moderate in the coming quarters.
"Deposit rates are likely to go up. We are going to review our deposit rates soon,” Shikha Sharma, Mananging Director and CEO of Axis Bank told reporters on the sidelines of a banking conclave organised by the Federation of Indian Chamber of Commerce and Industry here today.
“The deposit growth during the first quarter was weak. However, now with the liquidity back to normal levels, the deposit growth should be higher during the second quarter. We are going to review our deposit rates soon,” she added.
Axis Bank reported about 34 per cent rise in deposits last quarter. On being asked if lending rates are also likely to go up, she said, “Deposit rate are likely to go up before the lending rates.”
Credit growth to moderate
The bank also sees its credit growth moderating in the next few quarters at about 20-21 per cent, after last quarter it zoomed to about 39 per cent.
“Credit growth is likely to be moderate during the second quarter, but it will be more or less aligned to RBI's expectation of about 20-21 per cent growth for the year. The first quarter saw a very high credit growth, this was partly due to the telecom licence payments,” said Sharma.
Private equity fund
Axis Bank is in talks with about five-six investors for selling its private equity venture.
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“We are in talks with out LPs (limited partners) and about five to six investors of the fund. We are in no hurry, we will take a decision once we arrive at a consensus on the issue,” Sharma.
Public sector banks such as Canara Bank, Bank of Baroda, Union Bank, United Bank of India, Corporation Bank and Punjab National Bank have been prime investors in the infrastructure fund floated by the private equity arm of Axis Bank.