Corp Bank, P&S Bank stand out

These banks have kept rates lower than their bigger rivals

The announcement of base rates by public sector banks has thrown up a few surprises.

Consider this: Mangalore-based Corporation Bank, much smaller than heavyweights like Punjab National Bank, Canara Bank and Bank of Baroda, has kept its base rate 25 basis points lower (at 7.75 per cent).

“We want our bank to be customers’ first choice,” said a senior Corporation Bank official. “The decision to keep the base rate at 7.75 per cent was driven by the kind of liquidity we have. In addition, our cost is also less than that of most public sector banks,” the executive added.

New Delhi-based Punjab and Sind Bank, one of the smallest government banks in the country, also seems to be trying to stay ahead of peers. While most of its peers and even bigger banks like United Bank of India and Indian Overseas Bank have set their base rates at 8.25 per cent, P&S Bank has fixed its base rate at 8.20 per cent.

“The base rate was decided by taking six months’ cost of deposits. For us, it is 5.5 per cent. Adding other costs, the base rate was 8.19 per cent and we rounded off with 8.20 per cent. There was no reason for us to keep it at 8.25 per cent,” said G S Vedi, chairman and managing director of the bank.

Another interesting feature in the base rate numbers of public sector banks is the similarity of most banks’ rate. Bigger banks like Bank of Baroda, Union Bank of India, Punjab National Bank, Central Bank of India have kept their base rates at 8 per cent, while relatively smaller banks like Syndicate Bank, Vijaya Bank, Andhra Bank and Dena Bank have kept their base rates at 8.25 per cent.

“How can all these banks have similar base rates? Is the cost structure of all these banks the same,” asks a PSU bank executive.