'Soft interest rate regime over'

Punjab National Bank Chairman and Managing Director SS Kohli today said the soft interest rate regime was over and signs of liquidity squeeze were emerging.

He said liquidity was being squeezed out due to growth in credit and interest rates had hardened after the busy reason credit policy last month.

"The (yield on) 10-year paper is at 7.25 per cent. However, I expect the rates to stabilise at current levels," Kohli told reporters on the sidelines of a press conference to announce Bancon 2004, which starts Wednesday.

The PNB chief said the bank was awaiting government approval for the proposed issue of 50 million equity shares of Rs 10 face value. He said the approval was expected this week and the issue was likely sometime in January, as against the earlier plan of a December offer.

"The proposal is still with the government. We are waiting for a decision on it. This is likely to bring down the government holding from the existing 80 per cent to 67 per cent," Kohli said.

On the proposed acquisition of financial institution IFCI Ltd, he said, "Our position is as it was earlier."

Kohli said there was no news from the government, after a letter in January approving the acquisition in principle.

The government was toying with the idea of merging IFCI with IDBI Ltd, which was converted into a bank last month.

Kohli said investment banker SBI Caps was likely to submit a report on the merger by the end of the year.