'Deregulating savings bank rate not viable'

Deregulation of the savings rate is likely to destabilise the interest rate structure in the country, K R Kamath, chairman and managing director, Punjab National Bank (PNB), said on Wednesday.

“The savings bank interest is the anchor rate in this country. The interest rate structure in the country is based on that. If you destabilise it, the entire interest rate scenario would come under turmoil for some time,” Kamath said on the sidelines of a Ficci banking conclave.

He said whether this was the right time for the reform should be considered. “Along with this, we should deregulate savings bank products as well. But savings deregulation would adversely affect the lower-end customers adversely,” he said. Kamath said he expected the interest rate to come down in six months.

“With the Reserve Bank of India (RBI) expecting industry growth of 18 to 20 per cent, we are confident of growing between 20 to 22 per cent (this financial year),” Kamath said.

Though PNB feels there are no sector-specific concerns for the bank, Kamath said new proposals in the infrastructure space were few. On plans to buy 30 per cent stake in private life insurance company MetLife India, he said, “We have to get regulatory approvals for this. We have submitted our requests to both the Insurance Regulatory and Development Authority and RBI. Once the approval comes, we would come out with further details on the deal.”

The bank plans to hire about 9,000 people in two years. “The biggest crisis that the banking industry is going to face would be a manpower crunch. To tackle this, we have started a hiring process. We plan to recruit 3,000 officers and 6,000 clerks. The process may spill over to the next year. The bank has already conducted written examinations for both the categories and interviews to recruit clerks would start soon.