Going by liquidity measures taken, rate cut possible

Following the Bank of Baroda's (BoB's) December quarter earnings, its Managing Director and Chief Executive Officer DEBADATTA CHAND spoke to Subrata Panda and Abhijit Lele about the bank's performance, its strategy for the rest of financial year 2025 (FY25), and its expectations from the upcoming monetary policy meeting. Edited excerpts:

- DEBADATTA CHAND

The net interest income (NII) and net interest margin (NIM) growth was modest. How much has the deposit cost played an impact? If you look at the interest expenses, it is growing faster than the increase in the interest income. Currently, the deposit market is very tight, both in terms of growth and also on the cost side. So, clearly, the cost of deposit is higher resulting in a lower NII growth. Our nine months' margin has been 3.08 per cent and for the full year, we are targeting a NIM of something between 3 to 3.10 i.e., 3.05 +/- 5 basis points (bps), with an upward bias. There is an expectation of a rate cut, and if that happens a lot of the borrowing market and the certificate of deposits (CD) market would react to that. And that typically brings down the cost on the resources side. Hence, on the NIM side, we are quite hopeful that the full year, the margin we can keep it somewhere between 3 to 3.10 per cent.

What do you make of RBI's liquidity measures?