BoB not to hike home loan rates

Bank of Baroda (BoB), the country's fourth largest lender, today ruled out any immediate hike in retail lending rates, including home loans, but said it would examine charging better rates from corporates.

The bank also plans to open branches in 10 more countries in next two years and expects overseas operations to contribute 35 per cent of the bank's profit this fiscal.

"We are not changing interest rates instantaneously... We have no plans to change home loan rates also," chairman Anil K Khandelwal said after inauguration of the bank's retail loan factory here.

The situation, at present, is manageable although there is pressure on margin, but the bank will take a call if the pressure becomes unmanageable, he said.

Khandelwal said a large number of corporate loans have been given at sub-prime lending rates and the bank will try to convince corporate customers pay higher rates.

"Corporates can afford to pay a higher interest rate but within the range of prime lending rate," he said. The PLR is in the range of 10.25-10.75 per cent, but many banks have given loans to corporates at lower rates owing to competition.

Corporates have made good profit in the last fiscal and did not bear the high interest cost due to recent upward revision of interest rates in the industry as they had taken loans at cheaper rates.

The bank expects loan growth to be 25 per cent and deposit growth at 18-20 per cent this fiscal.

Though the bank can raise up to Rs 2,000 crore in tier-II capital, Khandelwal said the bank is likely to raise some portion of that in the current fiscal. Total business stood at Rs 1,53,574 crore in 2005-06 with deposits at Rs 93,662 crore and advances at Rs 59,912 crore.