Slow growth, high interest could impede loan growth: HSBC

Kolkata, April 12 (IANS) HSBC, Europe's biggest bank, Thursday said India's slow growth rate and high interest rates could hurt loan growth in the country going ahead.

'I think we will continue to see some loan growth...But there is some cause for concern going forward is interest rate remains high and growth continues to drop,' Naina Lal Kidwai, country head India and director HSBC Asia-Pacific, told reporters here.

She said the loan book of the bank would possibly remain 'flat' for the next couple of months.

'I think it will go down and it should pick up in the next couple of months.'

India's gross domestic product (GDP) is expected to grow at 6.9 percent in 2011-12. Asia's third largest economy had grown at 8.4 percent in each of the years 2009-10 and 2010-11.

Kidwai said growth rate was dipping as some sectors like power and mining were slowing down.

'There is some slowing down because sectors like power. Problem with power sector is coal linkages...Many were shut because of the short supply of raw materials,' she said.

Stating that some structural reforms at state electricity boards are necessary, Kidwai said a significant issue which still continued was the state electricity boards which were unable to pay power companies.

'Consumer durable sales are slowing down,' she added.