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Union Bank of India executive director K Subrahmanyam on Thursday said they were hoping for open market operations by the banking regulator in favour of easing the liquidity situation.
“There was a little easing but again the liquidity has tightened. We are hoping for open market operations in the course of next one week or so,” he told reporters when asked about the liquidity scenario in the banking sector. The Reserve Bank of India undertakes buying or selling of government securities to control the money supply in the market.
Mindful of the overall cost of funds to maintain the net interest margin at 3 per cent for the current year, the bank is not going after short-term measures. In March, short-term deposit rates normally shoot up in a scramble for achieving the targets but the management has asked its branches not to book deposits at higher rates as it is in a comfort zone, according to him.
Responding to a question, he said capital infusion by the bank would take place in a week after the extraordinary general body, slated on March 16, approves the plan. The government was liberal enough to sanction Rs 1,154 crore fresh capital to the bank as against a request for Rs 900 crore based on its performance parameters, he said.
Subrahmanyam also said another rate cut was necessary as the credit offtake had not gained momentum even after the recent revision because investors still felt the interest rates were high.
