At a time when other banks have been hiking their base rates, Bank of India says there is no need to do so. VR Iyer, CMD of Bank of India says that the bank’s liquidity position is comfortable and has no requirement to borrow in the marginal standing facility (MSF).
However, she adds a case for a base rate hike may arise on account of fall in deposit growth. The bank's deposit growth has been lesser than Q1 and if the need arises to increase deposit rates "we will look to hike base rates then," she told CNBC-TV18. The bank is also confident of containing the non performing assets (NPAs) to Rs 1,000-1,100 crore.
Below is the edited transcript of her interview to CNBC-TV18.
Q: Your peers have raised the base rates but you have not. Any plans of doing that?
A: As of now, we are not thinking of increasing the base rate. We are examining the pros and cons of it. Maybe, we will look into the matter shortly. But there is no immediate need for the same.
Q: If yields stay at these levels, do you see a case of base rate hike? How much yields would have to go up? By when will you be able to take a decision on this rates?
A: The bank's liquidity position is fairly comfortable. We do not have any high liquidity mismatches. We also are not feeling the need to borrow in the marginal standing facility (MSF). The deposit growth was pretty decent in Q1. We have good deposits for that matter.
I do agree that we will not be able to continue this way as in the current quarter’s deposit growth, has not been to the level as it was in the Q1. So, maybe within a week or ten days, we will revisit that. Whether there is a case for us to increase the rate of interest from the deposits, we will also relook at the base rate increase.
Q: Last time you spoke to us you indicated that Bank of India has put on sale non-performing assets of 64 accounts with an outstanding balance of about Rs 1,500 crore as a step to cleanup your balance sheet. Could you tell us what the progress on this has been?
A: We did not proceed with that as it was not competitive to go ahead. Currently, there are no assets on sale. We are just looking at our portfolio once again and then seeing whether it makes sense for us to doing any of those accounts.
Q: The macro economic picture has considerably worsened in the last couple of weeks with the rupee. In general, will the NPA picture for the bank in Q2 be worse than what we saw in Q1?
A: We will be able to contain NPAs at the level as it was in the previous quarters and on the restructuring book side. It should be lower for Bank of India, at least by 40 percent than what we did in the last quarter of the financial year.
Even in the Q1 of the current financial year our restructured portfolio was around Rs 755 crore. So, maybe a slight marginal increase be there, but we should be able to contain it below Rs 1,000-1,100 crore.