Cut base rate to be competitive; see FPO in'15: Bk of Maha

R Athmaram, ED, Bank of Maharashtra in an interview to CNBC-TV18 spoke about the reason for the base rate cut taken by the bank. The bank has cut base rate by 15 basis points to 10.25% with effect from December. Athmaram said with 20 of 26 PSU banks having cut base rate to 10.25 percent from 10.4 percent, their bank also decided to do so to be competitive in the market.However, he does not see any further cuts in base rates or deposit rates immediately.Answering a query on capital raising, he said there would be a likelihood of a follow on public offer (FPO) in the next fiscal but not immediately unless the government forces them to do so. Currently, the CRAR for the bank stands at 11 percent.

Below is the transcript of R Athmaram’s interview with Latha Venkatesh on CNBC-TV18.Q: What triggered this rate cut? Have you all already cut your deposit rates? Where do they stand?A: What happened in the month of April we worked out the base rate and at that point of time our base rate was much higher than the other peer group banks. So, we have been getting feedback from the field also that the base rate is on the higher side. Latha: How do you compare with other banks predominantly in western India like Bank of Baroda or Bank of India? A: Almost 20 out of the 26 public sector banks today have a base rate of 10.25 percent. So, we were a bit off-the-mark, so with this reduction we are now inline. Now this is the second half of the financial year, we really expect the credit growth to take off in a big way and so we did not wish to be non-competitive in the market and create problems for us.Latha: Do you expect a further cut in base rates or in deposit rates?A: Deposit rates also we had reduced, earlier we we had it around 9-9.02 percent and now we have brought it down to 8.75 percent.Latha: Are you expecting a further cut in either deposit rates or in base rate?A: Further cut immediately may not be possible. Latha: I am not asking base rate I am asking deposits. Do you see them falling further?A: Deposit rates I do not think we will be able to cut further because as you know already it is very sluggish both the deposit growths as well as credit growths are sluggish. So, we need to keep our term repo rate at least in the retail segment attractive to have a good mix of term repo rate.

transcript to follow