HDFC may cut interest rates next week

MUMBAI: HDFC Ltd, the biggest player in the home loan segment, on Friday said it may reduce its interest rates next week as the cost of funds has come down.

"There is a case for an interest rate cut. A decision in this regard will be taken next week but we have not yet decided on the quantum of the cut," HDFC executive director Renu Karnad told reporters here.

HDFC chairman Deepak Parekh said the cost of funds for the lender has come down and it would, therefore, review its lending rates.

"The funding costs have come down by 50 basis points and we are reviewing our lending rates in a week's time," he stated.

Parekh said he expected loan growth in the second quarter of this fiscal at 26-27% for HDFC while aiming for a growth of 20-25% for the whole fiscal.

"Property prices have softened, sales have slowed down and the investor is out of the system," he maintained.
Asked about a rate cut by the Reserve Bank of India in the light of moderating inflation rate, Parekh said though there was a case for cutting rates, one had to be cautious of the money supply in the system.

"There is a huge inflow of remittances, foreign direct investment and FII which could be inflationary so we should behave with caution and not do anything in a hurry."

On HDFC's general insurance partner, he said discussions were on with a couple of potential partners and a decision would be taken within a fortnight.