Expert Answers: Post-March, interest rates will ease

BUDGET TALK: K V S Manian, Head, Retail Liabilities and Branch Banking, Kotak Mahindra Bank.

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Keywords: union budget 2008, forecast

As the D-day nears, all eyes are set on Finance Minister P Chidambaram. The common man awaits with bated breath as the FM gears up to table the annual Budget in Parliament.

What is there for the Banking sector in Chidambaram's 7th Budget? Will the interest change? What lies ahead for banks this years Budget?

To find out all the answers, IBNLive.com organised an online chat with K V S Manian, Head, Retail Liabilities and Branch Banking, Kotak Mahindra Bank.

Here is an excerpt from the chat conversation.

Sarva: When will we get best bargain for interest rates-Now or post march? I see most of the banks give better discounts on PLR for home loans now.

K V S Manian: My advise will be to wait and borrow post March

Bala: Misuse of Surfaesi Act by Banks even when the NPA becomes standard assets should be avoided-Banks thretning under Surfaesi Act should comes to end in case of Regular EMI Payers in Housing Loans. There must be some norms to be fixed i.e minimum period for taking action under Surfaesi act-Just if the assets becomes NPA on 90 days-and the loan period was over 50%-because of the circumstance the it becomes NPA and afterwards if it is standard asset the action should not be initiated for interior motive of the bankers-borrowers must be protected in the genuine cases. Law must be in such a way that Regulars EMI payers after crossing 50% of the loan period the bankers should not call back the entire loan-in case if it becomes NPA just for short span of time.

K V S Manian: On the NPA issue the genuine borrowers need to be dealt with , with understanding and a solution based approach , at the same time the resolution and recovery process needs to be faster from the lenders perspective . I would generally feel that there are enough laws in our country and we dont need more of them, I think the issue is of speed in resolution/implementation.

Simran: Good evening sir... i wanted to know, what do you think about the opening up of the banking sector in 2009. will it be a boon or threat to our economy.

K V S Manian: Competition in general is good for that sector, players and its consumers, so I dont see a threat as long as there is a level playing field and Indian banks are allowed to also expand in foreign countries.

Priyanko Pal:1) Is the interest rate is going to higher side after budget? 2) what would be the effect on CRR after budget? 3) what would be the effect on FII? 4) Can we expect a good movement in the market due to banking sector, as lots of merger and acquisition is going to take place?