Public sector, Corporation Bank has declared to cut its interest rates by 50 basis points on fixed deposits of various maturities. The rate cut is likely to be valid from the beginning of next month.
Chairman and Managing Director of Corporation Bank of J M Garg said, "We have decided to slash term deposit rates by half a percent."
The interest rates would come down to 10% after the reduction is applicable, he added.
The decision follows from the bank's reduction in the benchmark lending rate- PLR- by 75 basis points. Corporation Bank has cut down its PLR to 13.25% from 14%.
Commenting on the credit growth, Garg said that loans disbursed by the banks are likely grow by 22% against the 25% growth witnessed in the first half of the current fiscal. The bank also expects its total business to rise to Rs 1,15,000 crore by the end of March 2009 from Rs 1,05,000 crore at the end of September 2008.
The further expects its deposits to rise by 18% and "the bank's focus going forward would on increasing its CASA (Current Account Savings Account) base," said Mr Garg.
Currently the bank's CASA stand at 26% of the total deposits and it aims to increase this percentage to 30% by the end of March 2009.
CASA are considered to the low-cost deposits and a rise in them would help the bank in increasing its Net Interest Margin (NIM), added the Chairman.
At the end of the first half of the fiscal, the bank's NIM stood at 2.43% and it intends to raise this to at least 2.75% by the end of this fiscal, he said.
Garg said reported that the bank plans to expand its branch network by opening 45-50 branches in the next four months. The Northern and Western regions of the country would be the bank's focus for branch expansion. Earlier the bank had expanded its overseas operation by opening a Representative Office in Dubai.
Mr Garg is the newly appointed CMD of Corporation Bank after B. Sambamurthy who retired on October 31st. Prior to his joining in Corporation Bank, Garg was an executive director of Punjab National Bank.