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Federal
Bank hints at increasing lending
rates
Our
Banking Bureau
11 December 2006
 Mumbai:
Private sector Federal Bank Ltd is likely to increase
lending rates in the near future following the Reserve
Bank's decision to hike the cash reserve ratio (CRR) -
the percentage of deposits that banks must park with the
central bank.
"Indian
banks do have scope for raising lending rates by 25 basis
points in the next two - three months on account of the
RBI's move to increase CRR as it will impact net interest
margin of banks," M Venugopalan, chairman, Federal
Bank, said.
The
Reserve Bank had last week raised the CRR to 5.5 per cent
to contain liquidity and check inflationary trends.
The
Kerala-based Federal Bank, meanwhile, proposes to open
over 200 branches in the next two years raising its branch
strength from 518 at present to 750 by 2008. The bnk also
has targeted total business of Rs50,000 crore.
The
bank is planning to set up a branch in the Middle East
through a joint venture with Dubai International Financial
Centre for catering to NRI customers. It will also awaiting
clearance from UAE authorities for setting up a representative
office in the UAE.
"We
will like to see our total business grow to Rs50,000 crore
from the present Rs32,000 crore by 2008," Venugopalan
said.
The
bank will also enter into a joint venture with Belgium-based
insurer Fortis International and IDBI bank for life insurance
business. "We have applied to IRDA for a licence
for life insurance business, which is expected to commence
from April next year," he added.
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