Decision on interest rates in May: Corp Bank

"We are in no hurry to take a decision on our interest rates ... we will wait and watch the situation," Corporation Bank's Chairman and Managing Director, B Sambamurthy, told PTI here today.

He, however, said that cost of funds for banks were likely to increase following the Reserve Bank's move to effect a three-tranche hike in the cash reserve ratio (CRR) limits.

"The 0.75 per cent hike in CRR will result in an increase in cost of funds for banks," Sambamurthy said.

However, whether banks will absorb the cost or pass it on to their customers remains to be seen, he added.

This being the slack season and there being more deposits with banks than credit outflow, banks could afford to wait and watch the evolving situation before deciding on their interest rates, he said.

"There is a possibility of effecting some adjustments on the liabilities side and partly passing on the increased costs to customers," he said.

"We (Corporation Bank) are, however, in no hurry ... we will take our decision at our ALCO meet next month," he said.

On home loans, Sambamurthy said that cost of capital in the housing segment would reduce following the Reserve Bank softening the risk provisioning limit of 50 per cent for loans upto Rs 30-lakh from the earlier Rs 20 lakh.