*Up-to-date with fund needs; won't hike rates: HDFC's Mistry* *HDFC's Keki Mistry believes that RBI measures are temporary in nature and will not warrant a rate hike. As far as its fund requirements are concerned, the housing major maintains a flexible approach and has shored up it requirements up to the month of July.*
*R*eserve Bank of India's relentless efforts to tame rupee has resulted in it imposing a string measures which are keeping banks on a tight leash. On Tuesday, the central bank announced fresh measures to drain cash, making access to short-term funds harder for lenders as it lowered the overall limit for borrowing under the daily liquidity adjustment facility (LAF) - which offers funds in exchange for collateral - for each bank to 0.5 percent of deposits from 1 percent. This move gave fresh thrust to the existing talks that banks will eventually raise lending rates. But HDFC<http://www.moneycontrol.com/india/stockpricequote/finance-housing/housingdevelopmentfinancecorporation/HDF> 's Keki Mistry believes that RBI measures are temporary in nature and will not warrant a rate hike. As far as its fund requirements are concerned, the housing major maintains a flexible approach and has shored up it requirements up to the month of July. However, if the tightening measure continues for unforeseen period, lending rates will have to be raised. Tuesday's moves come a week after the apex bank's initial steps which did not steady the rupee to the desired extent. The home currency remained volatile and within the sight of a record low of 61.21 hit on July 8. *Below is the edited transcript of his interview with CNBC-TV18:* *Q: You are more dependent on borrowing from the market and market rates have clearly gone up 200 bps in the last two weeks, what is your sense, is it only a matter of time before you push up lending rates?* *A:* When you talk about our borrowing, if you look at our balance sheet over the years, we have a very flexible approach to funding. At times when interest rates are low, yes, we raised a lot of money through bonds. At times when interest rates are high, we raised a lot of money through deposits. So we keep an extremely flexible approach to funding. For example, you would have seen that last year, you would have seen that the year before the last and so on and so forth. We have to plan our funding a little more carefully. If we have to first evaluate whether this is a long-term measure or a short-term measure, my personal view I reiterate what I have said earlier is that it is a little unlikely that this measure will continue for too long a time because if this continues beyond a month, it will start choking growth in the system. That to my mind is not what the RBI would be looking at. *Q: It is already two weeks, are you saying that your waiting period is August 15, when will your patience run out or when will your feeling turn around to this being slightly longish?* *A:* First we will have to see what happens in the credit policy next week. Let us see if RBI looks at interest rates whether they change anything on rates, they change anything on CRR. I personally don’t think they will but let us wait and see. As far as the policy measure is concerned in the recent past, I suspect they’ve done it is because they must be having data which would suggest to them -- and that is data which is not in our hand -- that there is a lot of speculative activity in the rupee, which is being created by people taking money, hedge funds or whoever, in the short-term market here and then shorting the rupee. Now, if in the long-term you want interest rates to come down in India then you need stability in the rupee. One cannot drop interest rates if you are seeing this kind of volatility in rupee. We have seen that over the last month to a month and a half the rupee has been very volatile. So if it is the measure just to get some stability on the currency based on the data that RBI has had then I don’t think this measure will last for very long. A month, five weeks, six weeks you cannot measure it in terms of days. -- CA. Rajesh Desai -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send email to [email protected]. Visit this group at http://groups.google.com/group/globalspeculators. For more options, visit https://groups.google.com/groups/opt_out.
