We are very near to the peak of interest rates cycle: MD, Bank of Baroda

Sanjeev Chadha, Managing Director and Chief Executive Officer, said that India is close to the peak of the interest rate cycle, and a return to normal is imminent. Bank of Baroda Here wed.

Shatha, who was visiting L The International Financial Services Center (IFSC) in GIFT City To open an expanded IFSC business unit, he said: “We are probably very close to the peak of the interest rate cycle. Both – the way inflation is heading and the fact that real rates are now positive. The rates we see now are not much different than they were a year ago after the virus hit. We are not seeing extraordinary prices as we see in Western countries.”

Notably, the RBI’s Monetary Policy Committee has implemented a cumulative increase of 250 basis points in repo rates since May last year amid inflationary pressures. In its last meeting held earlier this month, the The Monetary Policy Committee kept policy repo rates unchanged.

Also read: MPC hits the pause button; Not a pivot, says the RBI chief

Shadha reported that regular rates are good for the market because “it makes sure that you have a proper incentive to invest and also in terms of incentives for depositors, who again get positive returns.”

He further stated that last year was a good period for the banking sector, while he suspected some moderation after the post-Covid demand rebound, “It was much higher compared to the last three or four years,” said Shadha.

On opening the new and largest building in GIFT IFSC’s brigade International Financial Center, Gandhinagar, Chadha stated that the bank’s IBU has registered a growth of 500 per cent since it began operations in 2020.

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When we started three years ago, the IBU was about $700-800 million in business as of March 31, 2020. Over the past three years, we’ve been able to build this business to over $5 billion. Matches our business from London unit. As a result, GIFT City’s IBU has become our fourth largest international banking unit after New York, Dubai and London,” he said, expressing confidence in making GIFT IBU the third largest unit to overtake London anytime soon.

Today, we have a balance sheet of over $5.5 billion from GIFT IBU. We hope to double or triple that number in three to four years. Over the next 3-5 years, along with New York City, GIFT IBU will be one of the two largest wholesale centers for us.