New Delhi: Within hours of RBI cutting the cash reserve ratio by 0.25 percent, State Bank of India (SBI) said it will decide on reducing lending rates in a day or two for the benefits of borrowers.
"Our Asset Liability Committee (ALCO) will meet tomorrow (Tuesday) or day after tomorrow to review interest rates...Transmission of monetary policy to surely take place," SBI Chairman Pratip Chaudhuri told reporters here.
"Definitely, on interest rates there is a downward bias which is very supportive of growth. I am happy that RBI has taken into account our persistent request to do away with CRR," he said.
The bank can either cut base rate or reduce interest rate in some segments, he said, adding, the bank will pass on the gain to customers.
The monetary policy action will unlock Rs 2,500 crore for SBI and there will be savings to the tune of Rs 200 crore.
RBI today announced a cut in CRR, the percentage of deposits banks keep with central bank, to 4.5 percent.
However, repo rate, at which the central bank lends to the banks, would remain unchanged at 8 percent. The reverse repo, at which it absorbs excess liquidity through borrowings from banks, remains at 7 percent.
Asked about the second quarter expectation, Chaudhuri said "September quarter end result should be good. So far in August our net interest margins are on target."
In terms of loan losses and asset books, it looks a lot can happen between now and September, he said, adding "worst is over for asset quality."
For the first quarter ended June 2012, SBI reported a 137 percent jump in net profit at Rs 3,752 crore compared to Rs 1,583 crore in the same quarter of the previous fiscal.
The bank's net non-performing assets (NPAs) rose to 2.22 percent of total loan book at the end of June, against 1.61 percent a year ago.
In value terms, SBI's net NPAs increased to Rs 20,324 crore (2.22 percent of loans) during the June quarter, from Rs 12,435 crore (1.61 percent) in the corresponding period a year ago.
Similarly the gross NPAs of the bank rose to Rs 47,156 crore (4.99 percent) at the end of the first quarter, as against Rs 27,768 crore (3.52 percent) in the year ago period.
The bank's total income increased 16.89 percent in the quarter to Rs 32,415 crore, from Rs 27,732 crore in the same period a year ago.
SBI chief said even when there is slowdown in credit offtake but there is demand in home loan and car loan. There is weak credit demand from corporates and industry.
However, the bank is sticking to credit growth target of 16-18 percent for the current fiscal.
Asked if the bank has any exposure Deccan Chronicle, he said there is no exposure in the company.
First Published: Monday, September 17, 2012, 21:16