VR Iyer of Bank of India says that currently there is no need to increase the base rates as its liquidity position is 'fairly comfortable'. She told CNBC-TV18 that deposit growth in the times to come will decide whether to increase deposit rates, which will result in hiking base rates too.
We will be able to contain NPAs at the level as it was in the previous quarters and on the restructuring book side.
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.
Bank of India stock price
On January 30, 2015, Bank Of India closed at Rs 267.00, down Rs 13.65, or 4.86 percent. The 52-week high of the share was Rs 356.75 and the 52-week low was Rs 166.00.
The company's trailing 12-month (TTM) EPS was at Rs 42.54 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 6.28. The latest book value of the company is Rs 465.37 per share. At current value, the price-to-book value of the company is 0.57.
READ MORE ON bank of india, base rates, deposit growth, vr iyer, marginal standing facility, borrowing, lending rates, non performing assets, npa, cnbc-tv18
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