SBI may lower lending rate in next 2-3 weeks

SBI last reduced the base rate or the minimum lending rate in September this year. The base rate of SBI is presently pegged at 9.75 percent.

Gurgaon: State Bank of India (SBI) Wednesday indicated it could reduce lending rates in the next two-three weeks to boost credit growth.

"We had an ALCO (asset liability committee) meeting and there we did not cut the rates, but I am not ruling that out (rate cut). It could happen in the next two to three weeks," SBI Chairman Pratip Chaudhuri told reporters on the sidelines of World Economic Forum on India summit here.

"Our rates are the best in the industry today, particularly from consumer finance, home and auto," he added.

SBI last reduced the base rate or the minimum lending rate in September this year. The base rate of SBI is presently pegged at 9.75 percent.

Chaudhuri emphasised that there has been a strong co- relation between the reduction in interest rates and rise in demand for advances.

"We will see how the loan growth picks up. We are seeing a very strong co-relation as you drop the rates, the loan demand picks up very strongly," he said, adding that he would not be surprised if the home loan segment picked up by over 30 percent in the current fiscal.

Last month, RBI in its half yearly review of monetary policy left the key interest rate unchanged but reduced cash reserve ratio by 0.25 percent to infuse additional liquidity that will inject Rs 17,500 crore into the financial system.

Driven by huge inflow of deposits, SBI is currently having surplus liquidity of Rs 60-70,000 crore.

"With this kind of robust demand coming in, I have already said that we are very surplus in liquidity of about Rs 60,000-70,000 crore," he said.

"Deposit flow is so robust that today our biggest challenge is to deploy these deposits," he added.

When asked whether the bank would go for fund raising, he said, "If there is any debt raising it could be overseas raising. MTN would be the route because we have an enabling resolution for USD 10 billion. So there is enough room".

To a query related with NPAs, the SBI chief said it is spread across all the sectors.

"It is more pronounced in the infrastructure sector and sectors that are dependent on government for collecting the receivables (like construction sector and roadways)," he said adding, electricity board and other utilities too are the stressed sectors.

When asked about his views on CRR, Chaudhuri said it would not be "right" for him to comment on the correctness of the cash-reserve ratio.

The SBI Chief, however said that on basis of "principle" he still thinks that CRR is a waste for economy.

On a query related with the rating agency Moody's, he said, the bank has spoken to the agency.

"Moody's have taken a decision that no bank would have a rating higher than the country rating. So, at present our rating is equal to the country rating, so I think we are quite okay with that," he said.

Capital infusion in SBI by the government last fiscal has helped Moody's to regain their confidence in the bank.