The Chairman of Punjab National Bank was recently interviewed regarding the recent interest rate increases, both at state banks as well as private banking institutions, and has attempted to placate such concerns as being more psychological than practical.
Citing the cyclical nature of interest rates, the Chairman stated that interest rates would come down in the next few years, and that anyone getting long-term loans taking several years or a decade or more to pay off will experience both the high and low end of such a cycle. Home loans taken out now will start at with the high rate, and sink to the lower one in a few years, whereas home loans taken out several years ago at the lower rate will now move to the higher one, which will average out to a relative equilibrium.
Despite such consolation, consumers may have other, though rather minor, reasons to worry, aside from the increased interest rates at State Bank of India, ICICI, YES Bank and others. The current state of the global economy is rough, to say the least, and formerly affluent international markets such as the US and Western Europe are in a rather difficult state of economic crisis, for reasons of debt, unemployment, mortgage market meltdowns and others. For countries that rely either on production of goods or outsourcing of services for these countries, the demand will surely decline, at least to some degree, and without any significant method of improvement available on the horizon, it is unlikely that this demand will see such an increase in the near future.
On the other hand, emerging markets and developing nations are in a better position than ever before to weather the storm of this economic turmoil, having developed increasingly stable financial systems and job markets in recent decades, and consumer demand from a rather large emerging middle class will see places like India, China, Brazil and others able to grow during this period, as they already have, both due to internal demand as well as foreign demand from other stable or emerging economies. The world no longer needs to rely on the singular pillar of the United States for its economic integrity, and this will only be cemented as emerging economies continue to thrive, even in the downturn of major economic powers that will see their influence decline.
As for the average Indian citizen, this shift is likely to to happen over the course of oneā™s lifetime, rather than in a few years or so; still, the meteoric growth of countries like China and India will only serve as a reminder of how rapidly circumstances can change. Hopefully the interest rate alterations recently undertaken will be able to keep this growth stable; one of the main reasons given for such interest rate hikes was to curb inflation, which is critical for maintaining long-term growth, and if India ever wants to arrive on the world stage as a significant player on the world economic market, such stability will be rather critical in the long run. Ironically, economic lessons, specifically the kind to avoid, will draw their lesson plan from the mistakes of the formerly major Western economies.
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For more information about the services available from aforementioned banking institutions, check out PNB Net Banking, as well as the offers from a competing Canara Internet Banking.
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