With 25 basis point hikes in both repo and reverse repo rates by the Reserve Bank of India in its mid-quarter monetary policy review unveiled on Thursday, the bankers are in a wait-and-watch mode to decide about their deposit rates.
KR Kamath, CMD, Punjab National Bank said if there is a demand for credit and the bank decides to pass on the higher cost of funds resulting out of the increase in the key policy rates, then the deposit rates are all set to go up.
?I don?t think if there will be any immediate hike in deposit rates,?? added Kamath.
MV Nair, CMD, Union Bank of India is more categorical that there will not be any hike in deposit rates.
?Key rates might have been increased, but deposit rates are already on their peak and there is no case of increasing it any further as of now. Our bank is currently witnessing a deposit growth of 18% y-o-y basis at present,?? he said.
However M Narendra, CMD, Indian Overseas Bank prefers to differs with his peers on the issue
?Deposit rates may go up in the short-term by 25 basis points, whereas the long-term deposit rates may remain stable. The deposit rates may go up in the maturity period of upto six months only. For the long-term deposits, the rates will remain unchanged as the inflation is likely to start showing sign moderation by that time,?? he said.
RBI analysis says y-o-y non-food credit growth moderated from 21.3% in March 2011 to 20.6% in early June 2011, but remained above the indicative projection of 19%. The y-o-y deposit growth increased to 18.2 % in early June 2011 from 17% in March 2011. Consequently, the incremental non-food credit-deposit ratio moderated to 80.5 % (y-o-y) in early June 2011 from 95.3 % in March 2011. The y-o-y increase in money supply (M3) was at 17.3 % in early June 2011 as compared with 16.0 % in March 2011.