'Interest rates to rise'

Reserve Bank of India has been taking several anti-inflationary measures to tame the runaway inflation. As a result of this, interest rates are set to rise making it difficult for banks to expand their credit portfolio besides necessitating hike in interest rates on term deposits, said Karnataka Bank Limited Managing Director P Jayarama Bhat addressing the Regional Heads of the Bank at the Regional Heads’ Review Conference held in Mangalore on Monday.

The increase in the cost of lending will affect the quality of loans leading to a surge in NPAs. Mounting NPAs are a major worry for banks. It is, therefore, essential to give a great deal of attention to rein in escalating NPAs. NPAs will erode the profit of the bank, he said.

He advised Regional Heads to play the role of a friend, philosopher and guide. Competition has come to stay. We should be agile and aggressive to combat the fierce competition. Spread is our bread, he stressed.

Besides the ten Regional Heads other Executives at Head Office were present on       
the occasion.