Axis Bank CEO Predicts Interest Rate Hike Amid Narrowing US-India Rate Gap

Axis Bank CEO Amitabh Chaudhry predicts an interest rate hike in the near future, specifically citing economists' predictions for October or December. The current gap between US and India's interest rates is at its lowest level in over a decade.

The Reserve Bank of India (RBI) has maintained a 'neutral' stance on interest rates, but recent minutes from the August Monetary Policy Committee review indicate that some members are leaning towards a rate hike. Chaudhry also warned about dollar inflows through foreign currency non-resident bank deposits potentially leading to abnormal lending in the banking system.

As of August 31, foreign currency non-resident bank (FCNR-B) deposits have reached $127.2 billion, nearly seven times the amount gathered in 2013. With total inflows including external commercial borrowings and overseas foreign currency borrowings standing at $136.4 billion, Chaudhry's concerns about abnormal lending are valid.