A recent press report said that Canara Bank is hopeful of maintaining its net interest margin (NIM) at about 3 per cent during the current fiscal, inspite of the hike in interest rates announced by the RBI in its recent credit policy.The bank recently announced a 50-basis-point increase in its base rate to 10 per cent, and its BPLR has also gone up to 14.25 per cent from 13.75 per cent.
Mr S. Raman, CMD, Canara Bank, told the press that the actual impact of the RBI’s recent credit policy, in which it hiked the repo rates by 50 basis points, could be much more than what the bank has passed on to its loan namely home loan, personal loan, business loan etc. customers through the base rate and BPLR hikes. He added saying that there could be few malfunction in the first quarter of the current fiscal due to the hike but the bank will still continue to maintain 3 per cent net interest margin this year.
He also said that it was very likely that interest rates could go up by another 75-100 basis points which will be front-loaded depending on the rate of inflation. If the inflation is controlled, front-loading will be lessor.