scorecardresearchExpecting more rate hikes in FY23; tighter financial conditions can impact

Expecting more rate hikes in FY23; tighter financial conditions can impact growth: Deepak Parekh of HDFC

Updated: 30 Jun 2022, 07:50 AM IST
TL;DR.

Parekh, who is the chairman of HDFC Asset Management Company, said there are reasons to be optimistic on the growth front but factors like tighter financial conditions can have an impact on the GDP expansion.

Housing Development Finance Corporation (HDFC) chairman Deepak Parekh (L) and HDFC Bank chairman Atanu Chakraborty (C) listen to HDFC vice chairman and CEO, Keki Mistry during a media briefing in Mumbai on April 4, 2022. - India's largest private bank will merge with its largest mortgage lender to become a $237 billion financial giant, both companies said, as low interest rates send demand for home loans soaring. (Photo by Indranil MUKHERJEE / AFP)

Housing Development Finance Corporation (HDFC) chairman Deepak Parekh (L) and HDFC Bank chairman Atanu Chakraborty (C) listen to HDFC vice chairman and CEO, Keki Mistry during a media briefing in Mumbai on April 4, 2022. - India's largest private bank will merge with its largest mortgage lender to become a $237 billion financial giant, both companies said, as low interest rates send demand for home loans soaring. (Photo by Indranil MUKHERJEE / AFP)

(PTI) Inflationary pressures are likely to continue and force the RBI to further hike interest rates during the course of the current fiscal but the tighter financial conditions can impact growth, finance industry veteran Deepak Parekh said on Wednesday.

Parekh, who is the chairman of HDFC Asset Management Company, said there are reasons to be optimistic on the growth front but factors like tighter financial conditions can have an impact on the GDP expansion.

The RBI has already delivered two hikes, cumulatively raising repo rates by 0.90 per cent, as it saw inflation situation coming under pressure.

"The inflation pressure may not subside soon, increasing the possibility of further hikes into FY23," Parekh said, addressing the annual general meeting of HDFC Asset Management Company.

The optimistic outlook on the growth front comes from expectation of a normal monsoon, pick-up in discretionary spending, robust exports, improved financial strengths of both corporates and lenders, and signs of a private capital expenditure revival, he said.

Listing out factors which can impact the growth outlook, Parekh flagged out geopolitical conflicts lasting longer, elevated commodity prices, continuing global supply chain disruptions, along with tighter financial conditions.

Meanwhile, Parekh said the mutual fund industry in India remains significantly under-penetrated with the assets-under-management to GDP ratio at 16 per cent compared to the global average of 74 per cent.

Similarly, the equity AUM (Asset Under Management) to market capitalisation is 6 per cent as against the global average of 33 per cent, he said.

He appreciated the "dual role" played by capital markets regulator Sebi for the MF industry, pointing out that it has regulated the industry and also created conducive factors for its growth.

Parekh said HDFC AMC remains one of the preferred choices for individual investors with an AUM market share of 12.5 per cent from 58 lakh unique investors at the end of FY22.

First Published: 30 Jun 2022, 07:50 AM IST