It may be noted that the RBI has hiked interest rates by 0.90 per cent in two consecutive actions since May to contain rising inflation, as it tries to roll back the accommodative measures taken during the pandemic. .
Parekh said the impact on NIMs, which stood at 3.5 per cent for the March quarter and 3.7 per cent for the June 2021 quarter, would be for a “quarter or so”.
Parekh, while addressing the shareholders of HDFC at its Annual General Meeting, said, “The manner in which the interest rates have been hiked, has resulted in some transmission gaps and may have a short-term impact on margins, which is higher than the previous year’s.” substantially lower than the corresponding quarter.”AGM) was conducted virtually.
“When RBI hikes interest rates, our borrowing costs go up immediately, but there is a lag of a few months before we hike interest rates,” he said.
Parekh said several factors augurs well for India’s growth at present, but the mood is “sad” due to volatility in equity markets.
He said risk averse foreign portfolio investors are selling aggressively to offset losses in other emerging markets, which has created trouble.
Fortunately for the country, rising interest from domestic institutional investors and retail investors has helped support the equity markets, Parekh, a veteran in the financial services sector, said.
He said the positive signs for the economy, which is projected to grow at over 7 per cent, are the government’s commitment to higher capital expenditure, food security and capacity utilization which touches 75 per cent which is the key to a new private capex cycle. It marks the beginning, he said. ,
Parekh said the unusual measures were taken due to unusual timing, and they are currently being withdrawn in a calibrated manner, and that the RBI and the government seem to have worked together.
Indian inflation, which is consistently defying RBI targets, is not due to excess demand, but due to supply side issues arising out of rise in oil prices due to geopolitical tensions, Parekh expressed confidence. That the price increase will move downwards once the current problems ease up.
In such a context, there is a high demand for housing in the country which will translate into demand for home loans as well, Parekh said, adding that in March this year, HDFC saw the highest demand for a month in its history.
Parekh said that a separate meeting would be arranged for the approval of the shareholders for merger with the corporation.
and urged shareholders to show patience at Thursday’s AGM, and to address queries regarding the merger at a special meeting to be held later.
The merger, which was announced in early April, has required a series of approvals from financial sector regulators, including the RBI and IRDAI before leaving National Company Law Tribunal and shareholders, he said.