The private sector bank, Yes Bank, has said that it expects an increase in its net interest margin (NIM), by about 0.20 percent, as a result of rate cuts introduced by Reserve Bank for cash reserve ratio (CRR) and statutory liquidity ratio (SLR). Talking about the bank's expectation regarding the rise in NIM, the Founder, Managing Director and Chief Executive of Yes Bank, Mr. Rana Kapoor said that lowering of SLR and CRR will benefit almost all banks including Yes Bank. The bank hopes to increase the NIM to 3 percent by the end of the current fiscal. At present, its NIM is 2.8 percent, which is stable for the last 6 to 9 quarters. Over the last couple of months, the central bank has reduced SLR by 2 percent and CRR by 0.25 percent. SLR is the amount of deposits which have to be maintained by the banks in the form of government securities before providing loans to customers. CRR is the amount of funds that have to be parked with RBI. Both of these are means of controlling liquidity in the economy. RBI has reduced both of these to make additional cash available for lending to the banks. CRR does not provide banks any interest income whereas the interest earned through investments in government securities (SLR) is low as compared to the interest earned on advances. Mr. Kapoor further added that the bank is aiming a credit growth of 26 percent and a deposits growth of 18 percent this fiscal. |