:::::SRI S.B. RODE, OUR BELOVED PRESIDENT, AICBOF AND OFFICER DIRECTOR ON THE BOARD OF CENTRAL BANK OF INDIA HAS BEEN COOPTED AS GENERAL SECRETARY, AICBOF IN E.C. MTG. HELD AT MUMBAI ON 24.02.2014:::::MR. S.C. GUPTA, GEN. SECRETARY OF OUR AHMEDABAD UNIT HAS BEEN COOPTED AS PRESIDENT, AICBOF::::::WE CONGRATULATE THEM AND WISH THAT THE OFFICERS' MOVEMENT IN CENTRAL BANK OF INDIA WILL BE TAKEN TO NEW HEIGHTS:::::LONG LIVE CBOA:::::LONG LIVE AICBOF::::::LONG LIVE AIBOC:::::

CASA DEPOSITS TO HELP FIX A LOWER BASE RATE: SBI

India’s largest bank State Bank of India (SBI) has set the benchmark for the banking industry by pegging the base rate at 7.5%.

SBI is well positioned to fix the base rate relatively low, given its high share of low-cost current and savings bank account or CASA deposits.

The bank’s share of CASA deposits at 47% is second only to HDFC Bank. Thanks to this large base of CASA deposits, SBI’s cost of deposits aggregated 5.8% in FY10, which was one of the lowest in the industry.

Few banks in the country can count for 30% of their deposits being in the CASA category. This primarily includes smaller banks, which have lower CASA deposits. These banks have little choice but to settle for a higher base rate, which is bound to hobble them when up against competition.

Two other large state-owned banks, Bank of Baroda and Punjab National Bank, have pegged their base rate at 8%. While BoB had a share of 36% of CASA deposits in FY10, Punjab National Bank was in a better position at 41%. For SBI and these two banks, maintaining their NIMs should not be much of a challenge, but what would be interesting to see is how these lenders price loans for the bluest of blue chips.

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