BoB to raise Rs 2,000cr; hikes deposit rates

Bank of Baroda (BoB) today announced plans to raise Rs 2,000 crore by February 2008 to meet Basel-II norms. The bank also increased interest rates on term deposits by 25-50 basis points across maturities.

"We plan to raise around 2,000 crore through tier-II bonds by February next year," BoB chairman and managing Director A K Khandelwal told reporters here.

Although the bank has a capital adequacy ratio of around 12.9%, it needs additional capital in view of Basel-II norms, he said.

"We have revised deposit rates effective today by up to 50 basis points on various maturities," Khandelwal said.

The interest rate for deposits with a maturity of 91-180 days has been increased to 6.25% from 6%. For deposits with maturity between 180 days and one year, the rate has been increased to 7.25%, he said. One year-to-two year deposits would now get interest of 8.5% as against 8.25%.

The bank has discontinued, with immediate effect, its one-year deposit scheme that attracted interest of 9%.

Khandelwal said the bank expects to achieve 22-24% growth in advances and 20% growth in deposits in the current fiscal.