Punjab National Bank said that it may increase term depository rates by the coming month after observing the RBI’s monetary policy declarations on July 31.

While declaring the Q1 results, PNB chairman K C Chakrabarty said, “I don't see any possibility of lending rates being increased.”

Whilst he anticipated that RBI strategy would aim to conserve interest rates, he added that the bank had the lowest depository rates in the banking industry. Presently, the bank may swell the rates from 8.25-8.5 percent by about 50 basis points next month.

Mr. Chakrabarty ruled out an equity offering from the bank in the near future but believed the bank plans to climb up to Rs 1500 in Tier II debt by the end of March 2008.

“We are targeting credit growth of 20 per cent this fiscal year. We are planning to raise about Rs 1500 crore in Tier II capital,” he added.

He said there is very little cushion for the bank to rise with an equity plan as government stake in the bank already stands toned down to 57 per cent and it cannot go under 51 per cent.

“An equity offer involving only 6 per cent dilution can get us just about Rs 800 crore. Unless there is an exigency or a sudden requirement of capital, I don't think we should go for that,” he also added.