Sanjeev Chadha, MD & CEO, said that India is nearing the peak of the interest rate cycle, and a return to normalcy is visible. Bank of Baroda Wednesday here.
Chadha, who was on tour International Financial Services Center (IFSC) at GIFT City. Inaugurating an expanded IFSC business unit, said, “We are probably very close to the peak of the interest rate cycle. Both – the way inflation is rising and the fact that real rates are now positive. The rates we see now are not much different from the rates a year before Covid. We are not seeing extraordinary rates like we see in western countries.
Notably, the Monetary Policy Committee of RBI has implemented a cumulative increase of 250 bps in repo rates since May last year amid inflationary pressures. At its latest meeting earlier this month, MPC kept policy repo rates unchanged,
Chadha pointed out that normal rates are good for the market because “they ensure that you have the right incentives for investment and also in terms of incentives for depositors, who are again getting positive returns.”
He further said that the last year was a good period for the banking sector, while he suspects that there will be some moderation after the post-Covid demand boom, “but still, we should see a trajectory,” said Chadha. Far higher than in the last 3-4 years, banks can now look at a better asset creation cycle than in the last 5-7 years.
Speaking at the inauguration of the new and bigger complex at Brigade International Financial Center at GIFT IFSC, Gandhinagar, Chadha said the bank’s IBU has registered a growth of 500 per cent since it started operations in 2020.
“When we started three years ago, the IBU unit had a turnover of around $700-800 million as of March 31, 2020. In the last three years, we have been able to grow this business to over $5 billion. Comparison of our business with the London unit. As a result, IBU in GIFT City has become the fourth largest unit for our international banking after New York, Dubai and London,” Chadha expressed confidence that GIFT IBU would soon overtake London to become the third largest unit.
“Today, we have a balance sheet balance of over $5.5 billion from GIFT IBU. We expect to double or triple it in three-four years. In the next 3-5 years, along with NYC, GIFT IBU will be one of the two major wholesale trading centers for us,” he said.