Corporation Bank is unlikely to increase the lending rate during September, if the reaction of the Chairman and Managing Director of the bank to the mid-quarter policy review of RBI is any indication.
Mr Ramnath Pradeep, Chairman and Managing Director of the bank, told Business Line here on Friday that there is a need for the banks to take a call on increasing interest rates.
“Probably we may have to take a call on this, once September is over. This month, there may not be any hike,” he said.
On the factors leading to the 25 bps hike in repo rates, he said there was no alternative. The main focus of the RBI was to control inflation. “If the inflation is under control everything else can be controlled,” he said.
Mr Pradeep said that the debt crisis in some European countries will also affect the banks in India. “Since it is affecting the banks, naturally there is a need for the banks to take a call on increasing their lending rates,” he said.
However, he hinted at increasing interest rates on short-term deposits immediately. A decision on this will be taken soon, he said.
When told that there are signs of slowdown in the country and an increase in lending rate hike may hasten the slowdown process, Mr Pradeep said a consensus view of all the banks should be taken on this matter.
“If the banks can absorb this hike, they should not look for NIM (net interest margin). Today it is the question of supporting the growth of the economy. Instead of looking for NIM growth, there is a need to look at the growth prospect. A consensus view needs to be taken on this matter,” he said.