The Indian banking industry expects a decline in interest rates during the first quarter of this calendar year, Deepak Parekh, chairman of Housing Development Finance Corp (HDFC), said here Friday.

This, however, would happen only if the central bank, Reserve Bank of India (RBI), did not hike the cash reserve ratio (CRR), he added.

'Interest rates could go down by 25 basis point if RBI does not hike the CRR,' Parekh said, addressing a global trade conference organised by Indian Merchants Chamber (IMC) as part of its centenary celebrations.

Parekh said interest rates would go down because of the rupee strengthening against the dollar.

However, Parekh said since India is not an export-based economy, a recession in the US would not affect it in a big way.

China and South East Asian countries, on the other hand, would experience a tremendous impact of a US slump, he pointed out.

Earlier, Maharashtra Chief Minister Vilasrao Deshmukh inaugurated the conference in the presence of Minister for Overseas Indian Affairs Vayalar Ravi. Chairman of the Knowledge Commission Sam Pitroda also attended the inauguration.

Over 150 delegates from 15 countries and 250 from India are attending the conference.

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