State-owned Oriental Bank of Commerce (OBC) might consider an upward revision in its deposit and lending rates after the Reserve Bank of India's Annual Monetary Policy Statement for 2010-11 on April 20, Chairman TY Prabhu said on Monday.
"Immediately, we are not thinking of a rate hike because this (RBI rate hike last month) is only a signal that the RBI has given to contain non-food inflation," Prabhu said.
"We will wait for the credit policy, and based on that we will have to meet and review the position at that time. Some pressure we are seeing on the deposit rates... That kind of pressure is not there on advances," he said.
On March 19, in a surprise move, the central bank had hiked the repo and reverse repo rates by 25 basis points each in a bid to contain inflationary pressures.
Some banks, including the country's largest in the private sector, ICICI Bank, had raised deposit rates in February on some maturities on account of RBI's move to hike banks' Cash Reserve Ratio by 75 bps in its January policy review.
"We will review certain segments of the deposits, depending on maturity and liquidity... But we have not done it based on the RBI's current position. As of now, it is not warranted," he said.
Prabhu said further monetary tightening by RBI is likely if inflation continues to rise and demand for credit picks up.
"My own guess is that the position will not change so dramatically by next one or two months. But yes, if inflation continues to grow, demand for credit if it picks up, then there is every likelihood that RBI will take further measures, warranting banks to review their rate of interest," Prabhu said.
India's headline inflation rate had climbed to a 16-month high of 9.89% in February from 8.56% in January.
The current inflation rate is above the RBI's March-end projection of 8.5%.
RBI has acknowledged the possibility of inflation rate moving to double-digits in March.
Expanding reach
Oriental Bank's deposit base as on March 20 was Rs 1.16 lakh crore, up 23 per cent on year, driven by growth in current account savings account, and retail deposits, Prabhu said.
The bank sees its 2009-10 (Apr-Mar) deposits growth at 21%, he said. "In 2009-10, we opened about 1 mln new savings accounts. As far as deposits are concerned, our CASA was low at around 23.6% (end Mar last year) of the total deposits. A lower CASA share in our bank was on account of a very strong retail deposit growth that has occurred in the last two to three years.”
“This year, we started focussing on CASA and introduced two new products. In savings account we introduced the 'Pragati' scheme. This has been received well in the market. Because of this, our CASA has started improving.”
