Oriental Bank not to raise interest rates immediately

Oriental Bank not to raise interest rates immediately
PTI
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First Published: Fri, Nov 19 2010. 05 40 PM IST
Updated: Fri, Nov 19 2010. 05 40 PM IST
New Delhi: State-run lender Oriental Bank of Commerce on Friday said it does not foresee hike in interest rate in the immediate run but admitted that liquidity conditions were tight.
“I do not see the interest rate increasing now,” Oriental Bank of Commerce (OBC) chairman and managing director T. Y. Prabhu told reporters.
Liquidity, he admitted, was a matter of concern for the banking sector.
“There is less liquidity in the system and RBI also is looking at the issue of inflation. It wants to bring down the inflation. Therefore, RBI has kept liquidity in a negative mode,” Prabhu said.
Several other lenders like ICICI Bank and Punjab National Bank expect the interest rates to go up with likely pick in demand for credit.
The OBC chief, however, exuded confidence that RBI would act at appropriate time to ensure availability of adequate liquidity in the system.
“There have been some aberrations in the system due to the recent high success of public issues, which have sucked in lot of liquidity,” he said, pointing to the Rs15,200 crore initial public offer of Coal India Ltd and the Rs7,600 crore follow-on public offer by Power Grid Corporation.
He further added: “This is a busy season... now demand and credit will pick up and our GDP growth is also very good... So, I believe, that to fulfill the demand of a growing economy the RBI will ensure adequate liquidity.”
“Normally”, he said, “the demand picks up in the second half of the year, which is considered to be a busy season. Agricultural credit is also expected to grow with rising requirement for rabi crop. I expect good credit growth from both the agriculture and services segments.”
OBC is looking at a 20-22% credit growth this fiscal. “We have not revised our outlook. For the first half we had 16 per cent credit growth. In deposits, we expect growth of 23-24%,” Prabhu said.
Asked about the recent controversy in the micro-finance sector, he said: “Our exposure to MFIs is very low and that is also spread across 25-30 MFIs...We have gone very slow. We will now have to find out what their actual problems are...At the moment there is no great concern because our exposure is very much limited.”
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First Published: Fri, Nov 19 2010. 05 40 PM IST