Interest rates unlikely to rise: FM

Finance Minister P Chidambaram on Thursday said he does not expect interest rates to go up in reasonable future following the RBI's move to hike mandatory deposits of banks by 0.25 per cent.

He also expected loans to housing sector to increase without impacting interest rates as the Reserve Bank made changes in the housing loan portfolio norms.

Chidambaram said he has asked banks to review their derivative portfolio and ensure that customers understand the products.

"They (banks) are quite happy that only CRR has been hiked and policy rates have been untouched. They don't expect the CRR hike to impact interest rates. So going forward, in the reasonable future I do not expect an increase in interest rates by PSU banks," Chidambaram said. He was briefing reporters after a meeting with heads of PSU banks.

He said banks were particularly happy that there has been some changes in policy regarding housing loans. Now banks have greater freedom to lend up to Rs 50 lakh, he added.

"So housing sector can expect higher credit flow without impacting interest rates," the Finance Minister said.

Loans to individual housing sectors grew by 16.44 per cent to touch Rs 1,48,489 crore as on March, against Rs 1,27,522 crore a year-ago.