BoB CMD says no need to increase interest rates

LUCKNOW: The Chairman and Managing Director, Bank of Baroda , MD Mallya said that he did not forsee any need for the bank to increase its interest rates in the backdrop of RBI hiking key policy rates last week.

He said that most banks had already factored in the possibility of key interest rates being hiked by the central bank and had accordingly adjusted their rates at which they lend and take deposit from customers.

Mr Mallya who was in Lucknow on Tuesday said that credit demand peaks before March and then sees a dip from April onwards. The demand for credit would therefore remain subdued during the first few months of the next fiscal and as such increasing interest rates by banks may not be prudent.

Mr Mallya said that the BoB would be adding 500 more branches in the next fiscal year and expects to close 2011-12 with 4,000 branches across the country. They would also bee adding 16 international branches or offices taking BoBs presence abroad to 100 locations.

He said that BoB has seen an avergae credit growth of about 25-30 per cent over the last few years and in UP 33 per cent of the total lending is directly to the agriculture sector.

Mr Mallya also participated in the State Level Bankers Committee meeting of which BoB is the convener.

He said that UPs Credit Deposit ratio which stood at around 43 per cent till a few years back has now improved to 60 per cent. At the SLBC it was discussed that in districts where the CD ratio is below 40 per cent, the lead banker of the district should take steps to improve the availability of credit locally.

He said that BoB has business worth Rs 40,000 crore from UP alone and they are giving equal thrust towards penetrating the rural and semi urban centres.

Source: EconomicTimes