Syndicate Bank to pay interest on monthly basis

Syndicate Bank has decided to exercise the option of paying interest on a monthly basis from next month, a change from the existing system of quarterly basis.

Reserve Bank of India, in its monetary policy on Tuesday, had decided to give banks the option to paying interest on savings deposits and term deposits at intervals shorter than the existing quarterly intervals, since all banks are on core banking platforms.

Some banks are not keen on this option, as they feel that reducing the interval could hike interest costs.

Modalities

M. Anjaneya Prasad, Executive Director of Syndicate Bank, said the bank’s management will meet next week to work out the modalities for implementation of the monthly interest payment structure. “This will benefit the customers. There will be no change in rates (for the monthly option),” he told media persons here.

Interest rates

The bank does not see any immediate scope for reducing lending rates, after the RBI cut marginal standing facility by 25 basis points and raised repo rate by 25 basis points.

“I do not think there is room for immediate change in interest rates. I think they will remain at existing levels in the next few weeks,” Prasad said.

Credit spurt

The bank, which registered a tame growth of 3-4 per cent in credit in the first half of the fiscal, expects credit growth to spurt in the remaining months. “We hope to end the fiscal with a credit growth of 18 per cent. It will still be lower than last year’s 21 per cent,” he said.

Last fiscal, the bank’s London branch contributed significantly to the credit growth, but this year off-take has been lower there also.

amitmitra@thehindu.co.in

Source: thehindubusinessline