RBI may hike interest rates in Q4

The Reserve Bank is likely to hike interest rates marginally in the fourth quarter of this fiscal to give a signal to the market, a top financial sector expert said.

"To give a signal that the government is concerned about inflationary pressures, there is a chance of a marginal hike in interest rates in the January-March 2010 quarter," HDFC chairman, Deepak Parekh, told reporters at the Private Equity International India Forum, on Wednesday.

The hike in interest rates could be by at least 0.5 per cent, he said, adding, however, that any hike in rates was unlikely to happen in the current quarter.

On liquidity, Parekh said that presently it was sufficent. With a revival in the economy and pick-up in construction activities, banks could witness a growth in their wholesale loans going forward, he said.

However, any pick-up in loans to the commercial real estate sector is unlikely, he said.

"I don't see commercial real estate loans picking-up... there are a large number of commercial real estate properties that are ready to occupied," he said.

Parekh observed that housing prices have started inching up in the recent months.

HDFC has seen a sequential growth of 30 per cent in its loan approvals in the July-September quarter of this fiscal and expects growth to pick-up further in the coming months, he said.

Parekh said companies have to be cautious while pricing their IPOs as failure of large IPOs could dent investors' confidence.

"We must learn to leave money on the table. Investors are there to make money. If large IPOs fail, then there is a
huge repurcussion in the market," he said.