Corporation Bank will seek some relaxation in timeline from the Government for scaling down the share of bulk deposits to 10 per cent of its total deposits.
Bulk deposits account for close to 40 per cent of Corporation Bank’s total deposits as on March 31, 2012. (Bulk deposits are usually term deposits of above Rs 1 crore, with maturity of less than a year. Banks typically offer higher rates of interest on such deposits.)
Recently, the Government had asked banks to cap the proportion of bulk deposits to 10 per cent of their total deposits by March 2013.
According to Mr Ajai Kumar, Chairman and Managing Director, Corporation Bank, it might be difficult for the bank to drastically bring down its bulk deposits as that could impact its growth rate.
“Our bulk deposits are slightly on the higher side. The Government wants banks to scale it down to 10 per cent but it will be difficult for us to do this by March 2013. We are requesting Government to give us some more time for shedding it gradually,” Mr Kumar told newspersons on the sidelines of a banking conclave organised by the Federation of Indian Chambers of Commerce and Industry here on Wednesday.
Agri lending
Corporation Bank is looking to grow its agriculture lending to 7.5-8 per cent of its net advances in the current year. Agriculture lending was at 6 per cent as on March 31, 2012. Banks are stipulated to lend 18 per cent of their adjusted net bank credit to the agriculture sector.
“Our lending to agriculture sector is one of the lowest and this is because we have lesser number of branches in rural areas. We are setting up more branches in the rural areas,” he said.
Interest rates to soften
There is an improvement in the liquidity in the system and this could bring about some softening in interest rates, he said.
“I think the worst is over. The mad race by banks to offer better rates to depositors will not be possible as liquidity has improved. Interest rates should soften gradually,” he said.