The excess liquidity in the system will be balanced once advance tax flows and auctions kick in. Right now, while we have Rs 50,000 crore excess liquidity, auction and advance tax flows will take away Rs 40,000-45,000 crore -- so it balances, said MV Nair, chairman and managing director, Union Bank of India.

But right now there is abundance of liquidity and what call the Reserve Bank of India (RBI) takes, I won't be able to say, he added. He also refused to hazard a guess about whether RBI will hike CRR or not.

Nair said he firmly believes the interest rates wont go up because any further hike will hurt borrowers. Also, inflation has started coming down.

Overall, the indicators remain positive except for the excess liquidity, he said. That is why we gave the first indication that interest rates might go down, he added.

Recently, Union Bank cut down rates on housing loans by 50 basis points.

He also made clear that Union Bank has no plans to revise prime lending rates downwards for at least 5-6 months.