"Currently no," said the head of the nation's largest lender when asked if a base rate hike is being planned following its up to 150 bps hike in bulk deposit rates. Top private sector lenders such as ICICI Bank, Axis Bank and HDFC Bank have raised their base rates or the minimum lending rate following the recent tightening by the Reserve Bank to arrest the fall of the rupee since July 15.
The domestic currency has lost more than 21 per cent against the US dollar since April. Industry insiders say state-run banks may not increase lending rates due to "diktats from the Finance Ministry". Andhra Bank, whose chairman B A Prabhakar retires tomorrow, is the only PSB which has hiked its rate by 0.25 per cent early this month.
He said Andhra Bank's move is an exception as "the cost of funds is quite modest. Our base rate has always been low, that is our hallmark because deposit collection is efficient. Our average cost of funds is only 6.7 per cent." Chaudhuri, who will be retiring by next month-end, said the bank has decided to raise rates -- generally seen as a precursor to a similar action on lending rate -- on deposits of over Rs 1 crore.
State Bank of India has the smallest composition of such bulk deposits, the pricing of which the bank raised by up to 1.5 per cent yesterday. However, there will not be any deposit rate hike for deposits under Rs 1 crore, the SBI chairman said. In a series of moves, including capping banks' overnight borrowings, RBI has squeezed the liquidity, sending short-term rates to a high of 300 bps to 10.25 per cent.
Chaudhuri reiterated that banks with a higher reliance on short-term instruments like certificate of deposits and commercial paper are the ones raising their rates. Meanwhile, he said the bank will announce the name of one associate bank for merger by end of September.
When asked his reaction to the dismal GDP data of 4.4 per cent for the April-June quarter, Chaudhuri said: "As a banker, it does not affect me. Stock market people give a PE multiple base on growth, but as a banker I am only concerned whether they are servicing my debt. I am not too focused on where the stock market is going."