Q&A: Ramnath Pradeep, CMD, Corporation Bank

'We may raise rates if credit scenario demands it'

Corporation Bank on Tuesday launched floating rates both in the home loan and vehicle loan segment to boost retail credit. The bank has also announced to increase the deposit rates to attract low cost deposit. In an interview with Debasis Mohapatra, the new Chairman and Managing Director Ramnath Pradeep, discusses about the bank’s growth plans. Edited excerpts:

You have announced high deposit rates and lowered lending rates in the housing and vehicle loan segment. How will it impact your net interest margin (NIM) in the near future?
Definitely, there is some pressure on NIM as deposit rates are rising along with less than expected growth in advances. However, credit growth is expected to pick up in the second half of 2009-10, which will support our NIM. We are likely to close this year with a NIM of 2.5 per cent, which was 2.46 per cent last year.

What will be credit growth for your bank this year? How are things on the advances front as of now?
We are likely to witness a credit growth of 30 per cent by the end of this year. However, growth is not up to our expectation till now and will pick up in the second quarter. Our festive offer till December is one such effort in that direction. We are hopeful of disbursing around Rs 800-1000 crore under our floating home loan scheme.

Will there be a rise in lending rates in the near future?
Definitely, there is an upward bias in the lending rates due to recent policy rates’ rise. We will take a call to review our base rate in October and any rise in rates will depend on the credit growth scenario.

There is some kind of strain in your Casa (current account savings account) portfolio. What is your outlook for Casa by the end of this year?
The branch expansion plan will boost our Casa ratio in near future. We are likely to end FY11 with 27-28 per cent Casa ratio from around 24 per cent in FY10.