) (SBI), has decided to link its base rate the new lending rate regime to its six-month deposit rate. Other public sector banks (PSBs) are also planning to follow SBI in their base rate calculation. Though the methodologies among the public sector banks will remain the same, their base rates are likely to vary as banks pay varying rates on six-month deposits.
The SBI board on Saturday gave approval to the bank's decision to fix its base rate on six-month deposits. Chairman OP Bhatt had indicated on Friday that the bank would peg its base rates at 8%.
SBI chief financial officer SS Rajnan told FE, "Though we are yet to decide on our base rate and the method to be adopted for the calculation, I guess it will be our cost of deposit for six months, which is currently at 6%.''
Canara Bank chairman and managing director AC Mahajan said the bank would take a call on its base rate after June 15 while Bank of India CMD Alok Misra revealed the bank was working on the proper methodologies to fix the rate. "Liquidity is ample in the system at present. In that case, we may not think of increasing our rates," he added.
Central Bank of India CMD S Sridhar said even though the bank had arrived at a decision on its base rate, he couldn't disclose it now as talks were still on with others for sorting out some grey areas like those related to short-term loans and loans for priority sectors like agriculture.
He, however, added, "I find some upward bias in the interest rates. I believe that some portion of loan, which are given by us below BPLR, may get repriced."
IDBI is likely to decide on its base rate within a fortnight as it would not wait for others before taking a decision, said chief financial officer Sitaram. Bank of Maharashtra could fix the rate at around 8%, hinted CMD CA Pareira, while maintaining that the assets liability committee (ALCO) would take the final call within a couple of weeks. "Various options have to be studied before arriving at the rate. Still two things have to be kept in mind - it must be beneficial to my customers and must be in tune with my bank's cost of funds," he added. Though the lending rates would be competitive in case of agriculture, SME and retail loans, the spread would be higher in case of personal loans where the risk perception was quite high, he observed.
Andhra Bank chairman and managing director RS Reddy also said his bank had decided about the rate but it couldn't be disclosed now. The bank had put in place all the requirements for implementation of the base rate, he said. He, however, had an interesting observation to make: "Being the largest lender, SBI can't be the industry indicator on base rate. The reason is simple: SBI has got a free float fund on a large scale with it. Its CASA (current and saving account) is on the higher side and above all, its cost of fund is much lower than the industry average." Punjab & Sind Bank is likely to fix its base rate by June 25, said chairman and managing director GS Vedi. "I feel it may be around 8%. We will take the cost of deposit into account while calculating our base rate. Most probably, we will consider our interest rate on one-year term deposit, which is currently hovering at around 6% in case of bulk deposits, as the benchmark for our base rate,'' he added.
Indian Overseas Bank (IOB.NS : 91.8 +2.1
) chief SA Bhat was of the opinion that the base rate for the bank would not fall below 6% and was likely to be announced June 15. The United Bank of India board would meet on June 18 to take the call. "We will take into account our cost of funds and administrative costs while deciding our base rate,'' said CMD Bhaskar Sen.
No comments:
Post a Comment