HDFC Ltd Chairman Deepak Parekh on Tuesday said mortgage loans as a proportion to India's GDP was low at 11 per cent when compared to peers such as China and the US, and there was a need to push it up.

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"The outstanding mortgage loan to GDP in the country should increase. It is a long way to go," Parekh said at an ICC session.

According to him, the mortgage to GDP ratio in India is 11 per cent, compared to 18 per cent in China and 52 per cent in the United States.

Parekh said that the demand for housing in the country has never been as strong as today.

"Despite the rise in interest rates, the demand for housing is there and after two years of COVID, people are keen to upgrade their existing homes," he said.

Parekh said that though the interest rates go up, the tax deduction given by the government on annual outgo on this account brings the effective rates down.

As interest rates increase, people are given the option of either extension of loan repayment tenure or higher EMIs.

Parekh said that the high interest rates are connected to the global crisis caused by the conflict between Russia and Ukraine. "Normalcy will return once the crisis gets over", he added.

The HDFC Ltd chief said that India has not gotten into a debt crisis and is in a strong position.

Non-performing assets (NPAs) of the banks have also fallen. "However, the current global recession will impact us," he said.

"There had been FII redemptions in emerging markets like India as they could not sell in other markets like Russia and China. Also, the market in India is efficient and liquid," he said.

On the exchange rate, he said the country is well covered as the reserves are enough for nine months of exports.

Parekh is also of the opinion that the RBI has made a tightrope walk between interest rates and inflation.

In the September 30 meeting of the monetary policy committee, RBI raised repo rates by 50 basis points taking it to 5.9 per cent in the face of rising inflation.

"If interest rates rise, the growth suffers. If rates fall, inflation will take place," he stated, adding that the central bank has no choice but to go for 'cautionary' increases in rates.

According to him, the exchange rates in India are market-driven and RBI intervenes only when there is a free fall of the rupee.

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