'Interest rates may rise further'

Mumbai, Feb 21 (UNI) Market analysts and experts feel that since inflationary expectations are on the rise, retail interest rates might shoot up further in the coming weeks.

''Since banks are calculating the projected outflow of advances as on March 31, they are now seeking to grab deposits by raising interest rates. While some banks were giving 9.25 per cent on individual deposits, corporates were giving more than 10 per cent on bulk deposits,'' a broker specializing in banking scrips disclosed.

Regarding an impending liquidity crisis, he clarified that there was no such apprehension at the moment.

Though sufficient liquidity has been sucked out of the system by hiking the cash reserve ratio (CRR), there is a lurking fear of another kind of crisis in view of the high level of savings.

Overnight, even call rates had shot up following the CRR hike.

One also cannot rule out a further hike in CRR in the future, another market analyst said.

The RBI has recently hiked the CRR in two stages from 5.5 per cent to 6 per cent in an effort to suck out excess liquidity in the system and correspondingly arrest inflation.

UNI