Vijay Bank down on high cost depositsNearly 2,000 crore of deposits carrying an average interest rate of 9.6 per cent with Vijaya Bank are going to mature this month.
04 May 2008
Nearly 2,000 crore of deposits carrying an average interest rate of 9.6 per cent with Vijaya Bank are going to mature this month. The bank is going to say no for any further renewal request.
Bank deposits of Rs 48,000-crore are high-cost. This would come down to 18 per cent by March 2009.
The high cost deposits were raised for the past few years so as to be armed with adequate resources to seize lending opportunities.
The banks credit grew by 32 per cent as compared with the industry average of 22 per cent. The found has been second fastest growing among the other 27 public sector banks.
But currently the banks position is to fund its credit growth cheaper and hence it is thinking in favour of retiring high cost deposits.
The banks have pointed out that the bank's average yield on advances worked out to a comfortable 10.4 per cent.
The bank could raise Rs 3,600 crore in the form of both tier-I capital and tier-II capital (long-term debt).
The deposits will not be renewed at a rate more than 8.5 per cent.