Money & Banking

Bankers rule out hiking deposit rates for now

L. N. Revathy Vinson Kurian Chennai/Thiruvananthapuram | Updated on March 17, 2011

Mr P. JAYARAMA BHAT, MD, KARNATAKA BANK

Mr S. BALASUBRAMANIAN, MANAGING DIRECTOR, CITY UNION BANK.

Mr RAMNATH PRADEEP, CMD, CORPORATION BANK

Dr V. A. JOSEPH, MANAGING DIRECTOR, SOUTH INDIAN BANK.

Karnataka Bank, State Bank of Travancore, Corporation Bank, City Union Bank and South Indian Bank have clearly stated that they do not see any reason for increasing either the deposit or advance rates for now.

Mr P. Jayarama Bhat, Managing Director, Karnataka Bank Ltd, said the decision to increase would depend on the liquidity position of individual banks. He maintained that the liquidity position of his bank was good at present and saw no reason to increase deposit and advance rates. He, however, expects the higher interest rate scenario to continue for some more time.

Top sources at State Bank of Travancore (SBT) said the policy rates may have been tweaked, but not beyond the corridor already factored in by banks. SBT's Alco (Asset Liability Committee) is expected to meet for a customary post-policy session to review the situation and take appropriate decision. The source also added that the room for manoeuvring the deposit rate was limited now.

Corporation Bank has ruled out any hike in deposits or loan rates till March 31. Mr Ramnath Pradeep, Chairman and Managing Director, Corporation Bank, said neither deposits nor loan interest rates would be increased till end March.

Mr S. Balasubramanian, Managing Director, City Union Bank said the deposit rates had increased by 200- 250 basis points over the last few months not because of policy rate hikes but due to tight liquidity conditions and credit growth surpassing deposit growth. “It is quite possible that banks may not be rushing to increase the interest rates on deposits and postpone the decision to next financial year. Since the year-end pressures are almost handled, banks will take their own time before deciding any increase on deposit rates,” he said.

Dr V. A. Joseph, Managing Director, South Indian Bank, said the market had discounted the rate hike and saw no reason to tinker the rate at least in the next fortnight. He, however, foresees some sort of stabilisation in the rate, even a drop after April-May. “People will wait for the next fiscal,” he added

Published on March 17, 2011

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