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Uncertainty in interest rate regime

Ramesh Sharma

Outlook on margins: Mr M.S. Sundara Rajan, Chairman and Managing Director, Indian Bank, at a press conference in the Capital on Monday. —

Our Bureau

New Delhi, July 16 Indian Bank expects marginal dip in its net interest margin during the current fiscal on account of the uncertainty in interest rate environment and some slowdown in credit growth rate, a top official of the bank has said.

“Our net interest margins are likely to be around 3.45 per cent this fiscal. We had recorded a net interest margin of 3.6 per cent last year. This marginal drop in our margins is due to the uncertainty in interest rate environment,” Mr M.S. Sundara Rajan, Chairman and Managing Director, told reporters after presenting dividend cheques to the Union Finance Minister, Mr P. Chidambaram, here today.

Indian Bank has paid dividend of Rs 103.16 crore to the Centre towards 30 per cent equity dividend for fiscal 2006-07. The bank has also paid a preference dividend of Rs 32 crore to the Central Government towards the preference share capital of Rs 400 crore held by the Government.

On credit growth, Mr Sundara Rajan said that he expected net advances growth to be around 25 per cent this fiscal, which is lower than 29.23 per cent recorded in 2006-07. However, deposits are likely to grow by 20 per cent this fiscal as against 15 per cent recorded last year.

Mr Sundara Rajan also said that he does not see any substantial change in the sectoral share of its advances during the fiscal. “We will continue to focus on agriculture, SME, retail and corporate sector in the more or less the same proportion as we have done last year,” he said. The bank intends to grow its education loan advances by at least 25 per cent this year. “We will go all out to give education loans this year also. Last year we gave education loans to the tune of Rs 352 crore as against Rs 280 crore in the previous year,” the CMD said.

On branch expansion, Mr Sundara Rajan said that about 83 new branches would be opened across the country in the current fiscal.

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