Axis Bank CEO Amitabh Chaudhry at WEF 2024: 'Interest rates to remain the same in 2024, might see cuts next year'

Interest rates are going to remain the same in 2024 and might see a cut from next year, Amitabh Chaudhry, MD & CEO, Axis Bank said on Monday.

“We were expecting interest rate cuts to start earlier. So in my mind, I think the regulator knows what they're doing. I think the signals they get into the market are quite clear, as long as you read what they're saying. But I do expect them to read between the lines and the interest rates. Well, I think I will remain here for some time. I think I believe for this year and then maybe we'll start seeing some cuts beyond that,” Chaudhry said while responding to a question on possible rate cuts this year.  

Banking system in India is going through a goldilocks period as banks have cleaned up their balance sheets and they are well capitalised, corporates have deleverage and the retail sector is performing well, he said.

"Generally the credit quality is quite strong. The country where sentiment is quite strong and the GDP growth rate looking good," Chaudhry said while speaking to Business Today TV's Managing Editor Siddharth Zarabi at the World Economic Forum (WEF) 2024.

He pointed out the bank’s interest rates are not coming down, increasing the risk on certain categories of loans. They have increased the interest rates for those long categories. “So the regulator is saying that interest is going to remain here or remain high for a certain or longer period of time. We are in the risk taking business. We make mistakes during these times, In the bad times, we completely hatchet down. So we have to ask ourselves continuously, this question: are we making any mistakes and what are the mistakes we're making and what are we doing about maybe getting those? Now? We are lucky. We have a great, proactive regulator who's keeping a check on maybe some of the exuberance,” he added.

On private capital expenditure and corporate loan book, Chaudhry mentioned that the sentiment around private capex is definitely changing as a lot of scenarios arising after post covid-19 forced private players to pause for a bit. “I think the acceptability of the risk around that is more than before. Secondly, India's GDP growth rate is picking up. Third, they realised that India has played its cards quite well in this changing geopolitical scenario. So I think the comfort level is growing. Capacity utilisation has gone to a point where you need to spend money to increase your capacity. So all these are adding up to the private sector players saying that Okay, we are going to invest,” he added. 

On sectors that are going to do heavylifting this year, he said that real estate will pick up in 2024 along with consumer spending and overall manufacturing. “The consumption side is conducive. It's always cyclical. And I think now the cycle in particular you're seeing a lot of consumer spending. So the consumer spending, which has been good on the rule. We're seeing some signs of it kind of coming back to some extent. I think what the government is doing on the pls side and what impact it could have overall and manufacturing is good. I think India is seeing for the first time the emergence of high end technology in the start of the system. So that is also going to feed the economy in a good way. The commodity side of things can play up well. It could be steel, or it could be things of that nature. So that is also helping the overall private capital pick up,” Chaudhry said. 

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