homefinance NewsCentral Bank of India to link two products to repo rate in September, says MD Mohapatra
Central Bank of India to link two products to repo rate in September, says MD Mohapatra
State-owned Central Bank of India will link two products from assets to the repo rate next month, said MD and CEO Pallav Mohapatra. However, he said the bank is yet to take a call on linking the liabilities.
His comments came after Reserve Bank of India governor Shaktikanta Das on Monday said that the central bank will take steps to formalise linking of lending rates with external benchmarks.
"I cannot give the exact date but in September two products from the asset side will be linked to the repo rate. However, as of now linking the liability side with the repo rate - the bank has not yet taken a call," said Mohapatra in an interview with CNBC-TV18.
"The bank hasn’t seen a slowdown in deposits, in fact, there has been a pickup in CASA deposits and term deposits are also doing well," he added.
He does not expect to see any major impact on net interest margins by linking two products on the retail side to the repo rate.
Shyam Srinivasan, MD & CEO, Federal Bank, said, “We launched the external benchmark-linked lending on asset products two years back and today 20 percent of our book is linked to external benchmark rate (EBM), part of the retail and part of the corporate on the asset side and that continues. In the year ahead you might see that percentage increase.”
According to Srinivasan, it is unlikely that change to EBM linked pricing for deposits would automatically shrink the deposit growth. “The bank’s Q1 deposit growth was almost equal to credit growth, which is about 18-19 percent and we expect Q2 to look a little better because the rupee is weaker and NRI remittance is strong in Q2.”
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