Volatility in lending and deposit rates witnessed during the year is expected to end in 2009 with interest rates seen to be going down, due primarily to an easy monetary stance being pursued by the Reserve Bank of India (RBI) to push growth.
Interest rates on home and auto loans, which touched a 10-year high in the beginning of 2008, continued to go up till the global meltdown manifested itself, prompting monetary authorities across the world to intervene and reverse the trend.
Making a case for further reduction in interest rates, the Mid-Year Review of the Economy, tabled by the government in Parliament, said: "There is considerable scope for monetary policy easing over the next six to 12 months to offset the global increase in demand for money that is being transmitted to India."
ICICI Bank Managing Director K V Kamath also said, "Single digit lending rate and double-digit growth is what we should look forward to one year from now. Clearly, we see an environment of what we saw in 2001-02."
So what does this mean for a consumer? Home, auto and personal loans are expected to get cheaper next year while corporate borrowers too will also get credit at lower interest rates.
Interest rates peaked around August this year as the RBI tightened money supply to tame the spiralling inflation rate, which rose to 12.91 per cent for the week ended August 9.
The key short-term lending (repo) rate touched a high of 9 per cent while the borrowing (reverse repo) rate moved up to 6.5 per cent.
