Rates may rise by 50 bps: Morparia

The interest rates may rise by 50 basis points by the end of FY06, said ICICI Bank deputy managing director Kalpana Morparia on Friday.

The hike could be due to strong credit pickup and a flow through of oil price and commodity price increases, she said.

Speaking on the sidelines of the Global Banking seminar Morparia said the overall credit growth would be 23-25 per cent in 2005-2006 and credit demand by the corporate sector would pick up.Last year, the overall credit demand grew by 20 per cent of which 60 per cent was contributed by retail consumer credit, she said.

Commenting on pressure on deposit rates, she said, "there is good liquidity in the system. It's not going to be a liquidity driven interest rate hike."

On gross domestic product growth, Morparia expected the economy to grow at 8 per cent in the current financial year. The growth will be driven by the manufacturing sector and services sector, she said.

Morparia declined to comment on the equity issue that ICICI is planning shortly. "You will have to wait till October 13," she said. The bank's board will meet Thursday to discuss on the equity issue.