The country’s largest mortgage firm, Housing Development Finance Corporation (HDFC), will reduce the lending rates if the cost of funds comes down.
Speaking on the sidelines of a conference HDFC Chairman Deepak Parekh said there is a huge amount of liquidity in the system — both wholesale and retail. He added that the credit pick up is very low, especially from the small and medium enterprises sector.
“If the cost of funds comes down, interest rates will reduce,” Parekh said. HDFC had reduced interest rates last month.
Pointing to surplus funds in the system, he said banks had parked Rs 1,10,000-1,20,000 crore with the Reserve Bank of India (RBI) in the last two months alone.
Furthermore, the banks are maintaining higher than the mandated SLR ratio requirement. This gives them scope to liquidate their holdings in government securities and lend if demand picks up.
With the economy showing signs of recovery, he said every month is better than the previous one. On the housing front Parekh said the developers were now looking at building affordable houses and the prices have bottomed out by 15-30 per cent except for some parts like south Mumbai and the Delhi heartland.
He also added that developers are now concentrating at affordable housing. There is a huge demand from the retail side.
He pointed out to the ultra mega project saying although financial closure is there the construction is not happening. “We have the projects in the line but proper implementation is not happening,” added Parekh.
In the coming Budget, Parekh said the government should focus on social infrastructure. “The government spending in the two sectors health and education is too low and needs a new fillip in investments,” Parekh added.
On merger of HDFC and HDFC bank Parekh said that there is no development to it.
