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We are not desperate for bulk deposits any more: BoB chief

Shashi Ashiwal

Pinning hopes on rate cut: Mr Anil K. Khandelwal (left), Chairman and Managing Director, Bank of Baroda, and Mr Satish Chandra Gupta, Executive Director, addressing a press conference in Mumbai on Thursday. —

Our Bureau

Mumbai, July 19 Interest rates are likely to soften if deposit rates see a drop, said Mr A.K. Khandelwal, Chairman and Managing Director, Bank of Baroda.

“Interest rates must soften but for that to happen, deposits rates have to soften. As long as the current rates on deposit rates continue, interest rates on loans or advances cannot soften,” Mr Khandelwal said.

“Inflation is easing and there is surplus liquidity, so a softening of interest rates should happen,” he added.

On the falling of interest rates on bulk deposits, Mr Khandelwal said: “We are not desperate for bulk deposits any more.”

The Chairman was speaking on the occasion of the bank’s centenary celebrations.

In terms of expansion plans, the bank plans to increase its business to Rs 3 lakh crore by the end of 2010. Its current business has crossed Rs 2 lakh crore.

Bank of Baroda will raise around Rs 1,000 crore to augment its upper Tier II capital by March 2008 to maintain its capital adequacy ratio at 12 per cent post the Basel II regime.

The bank’s focus on its global operations will continue. “There will be a 35-40 per cent growth in international operations over the next three years,” he said.

On the home loan front, he said: “The Non-Performing Assets (NPAs) on the home loan front are a little worrisome for the industry on the whole.” He felt that frauds are a cause of concern even more than defaults and that it requires due diligence on the part of banks. The bank’s gross NPA stands at 2.6 per cent while its net NPA is at 0.6 per cent. The bank expects a 22-25 per cent year-on-year growth in credit.

Mr Khandelwal said the bank would either find a partner for its subsidiary BOB Cards or merge it with the bank by December.

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