Current rates may hit growth: ICICI

The Indian growth story could be derailed if interest rates continued to increase or even remained at the same level, said K V Kamath, managing director and chief executive officer, ICICI Bank, on the sidelines of a press conference in Chennai today.

Interest rates currently seemed to have peaked and might probably come down, he said. Kamath's comments on interest rates come at a time when the Reserve Bank of India's (RBI) first quarter review of the annual statement on monetary policy is less than a fortnight away.

"Credit growth has clearly slowed down across all sectors and lay consumers are under pressure. Their affordability has been impacted. Credit offtake has slackened and deposit mobilisation and liquidity are strong. Inflation is well under control at around 4 per cent and call rates are at 0.1 per cent. The analysis is very clear and the first challenge is to bring down borrowing costs. We have to wait for the RBI's signal and in another three months, we might see the cycle turn," Kamath explained.

He added that the RBI's hiking of interest rates was like a medicine, which had worked well, and "now it is time to get the patient back", implying that interest rates should ease now. He, however, maintained that the high interest rates had not affected the ICICI customers.

Earlier, addressing a press conference organised by the Confederation of Indian Industry (CII) on 'Building People, Building India', Kamath said that while the overall industrial momentum was continuing, there was some slowdown in a few sectors.

He said that this slowdown was on account of the "adjustment process" "" steps taken by the government to control inflation "" impacting the consumer demand.