Following the recent suggestion made by the finance minister, P Chidambaram to banks on lowering interest rates, the assets and liabilities committees (ALCOs) of member banks of Indian Banks? Association (IBA) will meet soon to discuss the issue.
The meet is likely to be before the month end, the day when the Reserve Bank of India will announce the third quarterly review of its annual monetary policy.
Speaking to the reporters after a banking technology conference, IBA chairman, MBN Rao said :?We will not wait for any policy signals from the RBI and IBA members are all set to put up the issue for discussion when their ALCOs meet later this month.?
However, Rao maintained that economic fundamentals would be a precursor to determine rates and not the unhealthy competition.
Rao said that domestic rates should ideally not rise especially when the rates across developed economies are showing a softening trend.
With inflation at a five-year low, the money has flown towards stocks and bonds investments. ?This implies there?s ample liquidity in the system.? It?s an history of sorts as this was the first time such investment levels have superceded credit disbursals, Rao said.
On the expectations of the forthcoming RBI policy review, he said that the policy will aim at containing the inflation rate below 5% levels or thereabout.
As for Canara Bank?s future plans, Rao said the government has already approved the bank?s proposal on government-stake sale. The government stake in the bank will be brought down to 51% from the present 73%. ?But we?ll do it in 2-3 stages.? The banks is also on the look out for acquiring a viable bank.
The capital adequacy ratio was currently at 13.89%, which was above that the average requirement of 12% and bank has got enough headroom for raising money under tier-II.
?But we have no plan for now after having recently raised Rs 700 crore,? he said. Rao said that the credit growth of his bank during the first week of December was 8.6%.
The bank will announce its Q3 results on January 29.