Lending rate cut to boost deposits, not credit growth: BofA-ML

Feb 06 2013, 00:11 IST
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SummaryBofA-ML India economist Indranil Sengupta pegged deposit growth picking up to 15-16 pc by March

as a hedge as inflation, we should expect households to break down fixed deposits to draw cash or write checks to buy property or gold. In reality, time deposit growth, at 14.6 per cent, has outstripped demand deposit growth (1.9%) or cash demand."

On the declining savings, which had dipped to 27.4 per cent as of the December quarter, he said over 60 per cent of this drop (which is only 10.8 per cent of GDP from a high 17.8 per cent in FY07) is driven by cyclical tightening by RBI to rein in inflation.

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