The Hindu Business Line : Timing evokes mixed response

Coimbatore, Nov. 1 Bankers reaction to the CRR, repo and SLR cut announcement made by the RBI today seemed no different. Only the timing evoked mixed response

While welcoming the move, the Executive Director of City Union Bank said, “it has come as an unexpected surprise. Its impact on the market will however be known only on Monday,” he said and added that it signalled softening of interest rates. City Union Bank plans to take the cue from the bigger banks before making a decision on the rate front. “We will take a couple of weeks,” he said.

CUB is expecting a release of Rs 230 crore following this move. It plans to utilise the additional funds for expansion of credit and improve its profitability.

The announcement did not surprise the Managing Director of South Indian Bank, Dr V.A. Joseph. ‘It was expected,’ he said and reasoned: ‘the steadily declining inflation rate and the ‘not very comfortable’ liquidity position in the system was enough to indicate that an announcement of a cut in the bank rate could be round the corner.’

South Indian Bank too plans to wait and watch the market for a few days before initiating any action on the interest rate.

“We are registering a steady growth in deposits because of the sharp decline in share prices coupled with subdued response for investment in real estate. Bank deposit appears to be the safe bet for parking funds at present.”

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