There is surplus liquidity in the Indian market and the trend will continue in the near future. “The reverse repo levels have been hovering above Rs 20,000 crore, which shows there is ample liquidity for the borrowers,” Allahabad Bank Chairman and Managing Director J P Dua told Business Standard.

He said although some liquidity could be sucked out from the system due to advance tax payments as the financial year rounds up, the surplus would still persist.

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Base rate would replace the current benchmark prime lending rate (BPLR) and would be fixed on the basis of cost of funds.

“There are issues, which are being ironed out by the banking regulator like whether the cost of funds will be decided on the basis of long term deposits, in which case the base rate will be higher and vice versa,” he added.

He maintained the base rate would usher in more transparency in the lending operations and benefit micro, small and medium enterprises (MSMEs) by checking the cross-subsidy in interest rates charged from large borrowers.

Dua was here to inaugurate e-payment of Uttar Pradesh (UP) commercial tax. It joins the league of State Bank of India, Punjab National Bank and Bank of Baroda to start this facility.

“We will achieve full core banking solutions (CBS) status by December 2010,” he informed. Allahabad Bank has 2,285 branches pan India, and has RBI licenses to open another 68 branches.

“We have achieved 100 per cent growth in deposits and MSME lending growth stands at 68 per cent,” he said adding UP with 700 branches continued to the focus area.

Allahabad Bank has 13 lead districts in UP and had set up two farmers training centres at Rae Bareli and Banda.

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