Raising key lending rates by 25 basis points by the Reserve Bank of India (RBI) Friday may not be the last rate-hike by the apex bank as the trend may continue due to high inflation, Exim Bank CMD T.C.A. Ranganathan said.
"This may not be the last time that we are seeing a rate hike, the cycle may continue because of the rising inflation. Industry must also adjust to this high tide level," Ranganathan told reporters on the sidelines of a programme, organised by the Indian Chamber of Commerce (ICC) here.
"RBI could start examining other selective credit control mechanisms to ensure growth in some sectors," he said.
The apex bank has raised repo rate by 0.25 basis points to 8.25 per cent and increased the reverse repo to 7.25 per cent.
Stating that raising interest rate regime was acting as a dampener for the industrial growth, Ranganathan said: "The reflection of a stressed economy can be seen in bank NPAs."
"NPAs are reflections of a company turning sick and it is directly related to increase in interest rates. Economic stress is much bigger a factor for increase in NPAs," he said.
Informing that the bank had already urged its clients to look for newer geographies, Ranganathan said:
"We have urged our exporter clients to diversify to other markets like Latin America and Africa because growth prospect in traditional markets like Europe and the US is limited."
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