Kolkata, Dec 12: With the change in rupee appreciation structure and supply of funds coming low, bank interest rates in the country are unlikely to fall in near future, State Bank of India(SBI) Managing Director T S Bhattacharyay today said.
''Interest rates are unlikely to come down in short or medium terms because of higher costs of raising funds,'' he told reporters on the sidelines of 'Fintech 2007', a seminar on knowledge sharing for financing, organised by Confederation of Indian Industry(CII).
Mr Bhattacharyay said that while the structure of NRI deposits had changed because of better appreciation of rupee, the FCNRB route was drying up, making it difficult to raise funds.
Moreover, there were constraints in making investment in long term funds because only a certain amount - between 20 - 30 per cent - was allowed to put in, he said, adding that the situation was causing a major problem to meet the demands for loans.
''Although there is a huge demand for loans, the supply side is not good,'' the MD said.
Responding to a question, Mr Bhattacharyay said SBI would come out with the proposed rights issue in the next two-three months and the bank was expecting a higher profitability and a better lending position this fiscal.