Punjab National Bank (PNB), the country’s second-largest public sector lender, will decide on raising deposit rates in the coming asset-liability committee (ALCO) meet scheduled for July 31. The bank will decide on lending rates after it has taken a decision on its deposit rates.
“The increase (in deposit rates) would be between 25-50 basis points, which would be done in phases,” said Executive Director Nagesh Pyadah, while speaking to reporters here.
On being asked about credit and deposit growth, Pyadah said: “We are expecting the credit flow to rise by 22 per cent and deposits to go up by 24 per cent in 2010-11.”
Likewise, Karnataka Bank will review its interest rates after a fortnight, though it expects interest rates to rise, Chief Executive Officer Jairama Bhatt said in a telephone interview.
The change in its base rate is likely to happen by the end of the current quarter, Bhatt said.
The situation before the base rate came into effect was simpler and lending rates rose following any rise in deposit rates.
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Revision in lending rates would not be a simple affair under the base rate regime, Bhatt said. Bankers were waiting for a signal from the Reserve Bank of India on the extent of increase in the key policy rates.
The change in the base rate was likely to happen at end of quarter, which would factor in the increase in the deposit rates, he said.