The Hindu Business Line : `Hike in home loan rates unlikely for now'

THE Chairman and Managing Director of Corporation Bank, Mr Cherian Varghese, does not see any immediate rise in housing loan interest rates. He was addressing presspersons after attending the seventh annual general meeting of the bank's shareholders.

"I don't foresee an immediate rise in the housing loan rates. Even on Thursday, the liquidity in the system was of the order of Rs 60,000 crore, with repos placed in the Reserve Bank of India," he said.

However, Mr Varghese said that one couldn't rule out upward movement of interest rates in the medium and longer terms. If the credit pick-up is accelerated and there is upward movement in the interest rates globally, there could be a ripple effect in India too.

While the near-term interest rates may remain stable, the medium- and long-term ones could see a slight upward movement," he said.

On ways to protect the bank's spreads, he said its net interest margin is 3.76 per cent, and termed it one of the best in the industry. "Our endeavour is to retain this trend. But we do acknowledge that there are competitive pressures. Borrowers will always ask for lower rates of interest and the depositors will ask for higher rates of interest. We have to balance between the two," he said.

Further, the bank is shifting to better yielding assets.

Stating that the bank would go more after savings and current account deposits, Mr Varghese said their share in total deposits went up from 28.5 per cent to almost 34 per cent in the last financial year.

The CMD hoped that the bank could maintain the margin as it is trying to reduce the cost of liabilities and protect the yield on assets.

Asked about the reasons for decrease in advances to public sector units in the last financial year, he said PSUs and most of the big corporates seek money at rates of 6 per cent and even below.

He said, "One has to make choice if you want to have a bigger balance sheet or like to maximise your profit. As part of our strategy we have been reducing our exposure to the ultra-price-sensitive corporations because of very low yield." To a query on sub-PLR lending, he said it formed around 18 per cent to 19 per cent of the bank's portfolio.

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