State-run Central Bank of India on Thursday said Reserve Bank of India's credit policy initiative has increased pressure on interest rates. "Interest rate situation has been kept under review. There is a upward bias on interest rate and the liquidity situation is a bit tight," Central Bank of India CMD S Sridhar said. However, the bank would not hike interest rates in the near term, Sridhar added. Earlier this week, the RBI hiked key short term lending (repo) and borrowing (reverse-repo) rates by 25 basis points each to check high inflation.
The policy rate hike is a signal of rising interest rates, but banks had said that they will not rush to hike rates immediately. The short-term lending (repo) rate now stands at 6.5 per cent and the borrowing (reverse repo) rate at 5.5 per cent.
"There is a general upward bias on interest rates," he said adding the bank has hiked deposit rates earlier this month and would not go for another round of deposit rate hike immediately.
He said the bank would see a credit growth of about 22 per cent in the current fiscal. At the end of March 2010, Central Bank's advances stood at Rs 1.07 lakh crore.
"Currently our credit growth is 22 per cent. We expect to end the fiscal with a 20-22 per cent credit growth," Sridhar added.
At the end of second quarter ended September 30, 2010, the bank's advances stood at Rs 92,212 crore (Rs 922.12 billion).
The Central Bank launched the e-stamping services, which is a part of e-governance initiative. Under this the bank has partnered with Delhi government for stamping documents electronically.
On the bank's proposed Rs 2,500 crore (Rs 25 billion) rights issue, Sridhar said it will hit the market before the end of the current fiscal. "We are waiting for Sebi approval. The issue will come before March," he said.
The government has already approved rights issue for the lender in June last year. The government holds 80.2 per cent stake in the bank and therefore it will have to subscribe an equal percentage in the proposed rights issue to retain the present level of ownership.
Shares of Central Bank of India were trading at Rs 176.35, down 1.89 per cent over previous close on the Bombay Stock Exchange.
