The cut in cash reserve ratio (CRR) could reduce the need of the banks to go in for large bulk deposits at high rates, Bank of Baroda Chairman and Managing Director M. D. Mallya said here on Monday.
Less dependence on such high-cost deposits could result in overall moderation of the deposit and interest rates, he told presspersons after inaugurating ‘Baroda Pride’, a new, own building of the bank to house the zonal office (Tamil Nadu and Kerala) and Mylapore branch.
With the reduction in the CRR requirement, the banking system would have “incremental funds to lend to the productive sectors of the economy.
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“Therefore, liquidity would not be an issue,” Mr. Mallya said. Based on the signals given by the RBI, he said, Bank of Baroda had reduced home, vehicle and traders loan rates as part of its effort to pass on the benefit.
The reduction in the deposit rates by the bank last month was done to align the rates, he added.
The bank, he said, looked forward to the festive season, as it is in the second-half of the fiscal that the “real demand picks up.” On vehicle loans, it is offering a 50 basis point concession and not levying processing fee, during the festive season. Though credit offtake this year was subdued, the bank expected to grow at 19-20 per cent. On non-performing assets, he said the incremental delinquencies were around 1.35 per cent. The bank’s portfolio was “very well balanced”, and Rs.780 crore loans were restructured in the first quarter of this fiscal. He said Bank of Baroda would be adding four more branches, taking the number of its facilities abroad to 100 in the next few months. It had also been given permission from the Australian banking regulator to open a branch in Sydney.
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