No hike in lending rates: BoB chief

Bank of Baroda (BoB) has no plans to increase lending rates now, despite an upward movement in interest rates and signs of pressure on liquidity in the banking system.

"Interest rates are hardening and liquidity is under pressure. There is bound to be some pressure when large amount of funds would flow out of system following redemption of IMDs (India Millennium Deposits) by the end of this month," said Anil Khandelwal, chairman, BoB.

The economy is showing robust growth and the performance of BoB is on track in the current quarter. However, the deposit growth is not what we want it to be, he said.

Asked if the bank would face resource crunch resulting in inability to support credit demand, BoB executive director A C Mahajan said, "the bank is concentrating on mobilising low-cost deposits. It may look at tapping the certificate of deposits (CDs)."

The bank does not plan to liquidate part of the excess SLR (statutory liquidity ratio) holdings to fund any shortfall in resources. "There is no plan to liquidate part of the excess SLR securities as they provide over eight per cent return," Mahajan said.

BoB's SLR portfolio is about 37 per cent of the net demand and time liabilities, 12 per cent more than the statutory requirement of 25 per cent.

BoB plans to roll out core banking solution (CBS) at 125 branches "� 116 in India and 9 in the United Arab Emirates and Oman "� by March end. It would extend CBS to another 600 branches including most of the international branches in FY07.

The entire network of 2,738 branches is expected to be on CBS platform by March 2008. CBS will seamlessly integrate various applications such as general ledger, risk management and cheque truncation.

The delivery channels such as branches, ATMs, Internet and phone banking would also integrate with CBS.