Chennai, Oct 22 (IANS) While hiring around 500 fresh hands, Tuticorin-based Tamilnad Mercantile Bank Ltd is expected to shortly announce an interest rate cut on its advances, a top bank official said Thursday.
“In the last six months, our current account and savings account (CASA) deposits went up to Rs.230 crore and the target for the current fiscal is Rs.650 crore. This has reduced our average cost of deposits to 7.45 percent from 8.08 percent,” G. Nagammal Reddy, managing director and CEO, told reporters.

“The overall cost of funds too has gone down and we would like to pass on the benefit to our borrowers,” he said speaking on the sidelines of the bank’s debit card launch function here.

He said the decision would be taken in such a manner that the bank’s top and bottomline are not impacted and cited the bank’s decision to reduce interest on export credit by 1.25 percent to 7.5 percent.

“It was done to expand our export credit business where our presence is minimal,” he added.

For the current fiscal, the bank is targeting a total business of Rs.20,000 crore (deposits Rs.11,500 crore and advances Rs.8,500 crore), up from Rs.16,100 crore (deposits Rs.9,500 crore, advances Rs.6,600 crore) in FY09, Reddy said.

He said the bank has applied to the Reserve Bank of India (RBI) to open 40 new branches with an idea to increase its distribution network to 250 by the end of this fiscal from the current 215 branches.

According to Reddy, the bank will hire around 500 employees this fiscal, taking the total manpower to around 2,800.

The bank is negotiating with private life insurer ICICI Prudential Life Insurance Company Limited for a bancassurance partnership. Tamilnad Mercantile Bank has recently signed up with United India Insurance for selling general insurance policies.