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Monday, August 6, 2012

IOB likely to cut lending rates

Indian Overseas Bank is likely to cut interest rates on housing, vehicle and other retail loans after the RBI pared down SLR rate by one percentage point in its latest quarterly monetary policy review.

SLR or statutory liquidity ratio is the proportion of deposits that banks have to maintain in the form of investments in cash, gold or government paper. A cut in SLR rates injects fresh liquidity into the banking system.

IOB will get an additional liquidity of Rs 1,800 crore after the SLR cut. This has given us room to cut lending rates in the required sectors,” the bank’s Chairman and Managing Director M. Narendra told Business Line.

The bank’s senior management team will be meeting on Monday to take a call on the quantum of rate cut.

The bank will also utilise the liquidity to step up its branch expansion programme. It is adding 400 branches this fiscal to take its total network to over 3,000. “We also plan to add 1,500 ATMs to our network of 1,524,” he said.

It will also be setting up 15 specialised agri-branches in Karnataka and Maharashtra, which will reach out to the farmers for their credit needs. It is setting up a national sales force comprising 450 MBAs, apart from recruiting credit specialists and at least 1,500 clerks in the next few months.

Narendra said the bank would be going ahead with its plans to raise $500 million through overseas bonds unless there was a fresh setback to the global economy. The bank’s optimism is based on the good rates that SBI and Exim got recently for their overseas issue.

IOB will spend the proceeds of the bonds for funding its overseas operations. “We have six overseas branches, which we plan to upgrade. Besides, we are looking at new geographies such as Africa and Senegal,” he said.


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