Scope for Further Reduction in Rates: Aditya Puri

EMIs on loans could be headed lower even if the Reserve Bank does not cut interest rates in the coming months, says Aditya Puri who heads India's second biggest private sector lender HDFC Bank. (Watch Video)

"There is scope for further reduction and you will see much faster transmission going forward... The trajectory for interest rate is down and you should see it in next 3-4 months with or without a rate cut from the RBI," Mr Puri told NDTV.

India's biggest lenders started cutting base rates (minimum lending rates) last week after Reserve Bank Governor Raghuram Rajan pulled them up for non-transmission of back-to-back repo cuts in January and March earlier this year.

HDFC Bank cut its base rate by 15 basis points to 9.85 per cent on April 7; its parent HDFC cut its home loan rates more aggressively by 20 basis points to 9.9 per cent for new as well as existing borrowers.

Continued easing in inflation has further increased chances of rate cuts. Wholesale price inflation declined at the fastest pace in at least nine years to - 2.33 per cent on cooling oil and manufacturing costs. The closely watched consumer inflation, the measure tracked by the RBI, eased to a three-month low of 5.17 per cent in March.

Economists at Barclays Research wrote in a note that the "continued benign trends in inflation and inflation expectations could provide room for further easing" by the RBI.

Deposit Growth
Mr Puri says deposits have also starting to grow, a good sign for the economy. "We can safely say that bottom is behind us and the economy is on an upward trajectory. India is a bright spot in the global economy," he added.