Rate deregulation step in right direction: City Union Bank

9331 Investors following City Union Bank. Share this News with them.

0

Like this story, share it with millions of investors on M3

Rate deregulation step in right direction: City Union Bank

N Kamakodi, MD & CEO, City Union Bank tells CNBC-TV18 that the bank never expected that having a lower CASA would be of benefit to them.

Post your opinion here

 

0

Tweet

Share on Tumblr

ALSO READ See latest News about City Union Bank See previous management interviews See what other Experts & Brokerages are saying about City Union Bank

A significant move in the RBI policy was to deregulate the savings bank deposit rate with immediate effect which took markets by surprise.

N Kamakodi, MD & CEO, City Union Bank tells CNBC-TV18 that the bank never expected that having a lower CASA would be of benefit to them.

Traditionally they have had lower CASA. City Union Bank's average CASA ratio stands at 20% out of which only 12-13% is savings banks. It may get closer to 90 days deposit rate. Even a 1% hike on deposits which are having average balance above Rs 1 lakh, will not impact them by more than 5-6 basis points. Even if a situation were to happen where the maximum increase in the interest expenditure was by about Rs 5-6 crore which would again translate to about 3-4% of their overall profit.

Kamakodi doesn't see any major immediate impact because of that. In the long-run he is waiting to see how the bigger players react in the market. A similar situation happened decades back when deposit interest rates were deregulated and about 3-4% increase in the overall deposit rates happened which eventually cooled down, in tune with the requirement for the loans.

So he doesn't see any major panic to happen because of these announcements. The positive thing which has happened now is that deregulation of the branch licensing for the tier II cities is a very good boon for all the banks. Except for tier I centers, the banks can open their branches at any place of their choice just by informing the RBI which is a positive for the banking industry as a whole. Kamakodi hopes these things will have a positive impact in the long-run for the banking industry as a whole and particularly for City Union Bank.