Kanakamahalakshmi co-op bank hikes interest rates

Visakhapatnam-based Kanakamahalakshmi Co-operative Bank Limited has increased its interest rates by 0.5 per cent to 1 per cent on term deposits to enhance its deposit base.

"We have decided to sanction housing loans to middle-class customers and to meet this requirement, the bank needs some additional funds. Keeping this in mind, we have raised interest rates on deposits," P Raghunadha Rao, chairman, Kanakamahalakshmi Co-operative Bank, told Business Standard.

The bank would give loans to middle-class customers for purchase of small apartments or Visakhapatnam Urban Development Authority-approved house sites in and around Visakhapatnam

The bank now offers 10 per cent interest on five-year term deposits and 1 per cent extra for senior citizens. It will now pay additional 0.5 per cent interest on below one-year deposits and 1 per cent additional interest on about one-year deposits on the existing interest rates.

This single branch bank currently has deposits of Rs 28 crore. With this hike, the bank expects about 4 crore new deposits over the next six months.

"By end of this fiscal, we are planning to sanction small housing loans to the tune of Rs 3 crore," he said.

The bank's current loan portfolio is about Rs 22 crore. Of this, most of the advances were given to small business sector and gold loans. The bank has also increased its interest rates on advances by 0.5 to 1 per cent.

"As of March 2006, our net NPA was 2.67 per cent, we hope to reduce it further in the coming days," he said.

The bank is awaiting the Reserve Bank of India's approval to open another branch at Gopalapatnam.