New Delhi: The country's largest lender, State Bank of India (SBI), Wednesday ruled out the possibility of cutting its minimum lending rate or base rate, saying it was the lowest in the market.
"We are already at the lowest. We are at 9.7 percent (base rate). Other banks have been asked (by Finance Minister P Chidambaram) to come to SBI level," bank Chairman Pratip Chaudhuri said here.
"Our home loan rates are at 9.95 percent, everybody is at 10.2. We are ahead of the curve," he said.
Earlier today, after a meeting with heads of public sector lenders, Chidambaram said he had suggested the banks consider reducing lending rates to stimulate credit growth.
"We have advised banks to take a look at the base rate. The base rate of SBI is 9.7 percent. The average of the base rate of other banks is 10.2 or 10.25," he said.
"I have impressed upon the bankers...The Reserve Bank of India has cut its policy rates by 125 basis points and some part of this must indeed be passed on to the borrowers," Chidambaram said.
Room to pass on the rate cuts to consumers is restricted because provisioning requirements have increased by about 50 basis points after new norms and the cost of money has risen by 40 or 50 basis points, he said.
"Nevertheless, all of them assured me that during this month -- in the month of July -- they will review their base rates and they will take appropriate decision on cutting the base rate," Chidambaram said.
A cut in the base rate would be a powerful booster for the economy and a powerful stimulus to credit growth, he added.
SBI is very comfortable on the liquidity situation, Chaudhuri said.
"I am having 50,000 crore of excess liquidity," he said.
First Published: Wednesday, July 03, 2013, 19:05