Increase in interest rates could derail country's growth: SBI
Chennai: Public sector State Bank of India on Monday said an increase in interest rates could lead to "derailing" the growth prospects of the country.
Inflation at present "is over eight per cent and an increase in interests rate can lead to the danger of derailing the growth prospects (of the country)," SBI Chairman Pratip Chaudhuri told reporters here.
Further, he said that the bank was not is favour of deregulation of savings bank deposits and has sent their view to the RBI, stating that deregulation may not be necessary.
"We are not in favour of deregulation but adequate incentives for saving bank deposits. We will go along with whatever the Reserve Bank of India prescribes," he added.
Commenting on their plans to merge with its associate banks, he said, "We are still in the process of observing State Bank of Indore... We are not under pressure or in any urgency that the merger should happen tomorrow or day after.
The need to merge is well established as it will bring in the synergies and deduplication".
On the proposed rights issue, he said they were still holding dialogue with the Government.
"We are talking to the Government because the total amount required as fund is quite substantial. Since we need upward of Rs 10,000 crore, government needs to make sure what will be the source and what will be the modality", he said.
The bank has also set up a new vertical to reduce bad debts.
"We have created a new vertical -- the Stress Asset Management Group. We are using more technology and are deploying more resources for recovery of bad debt. We are also trying to improve the quality of the origination of our loans", he said.
The SBI chairman believes that the biggest challenge for the bank is to take it forward, particularly with regard to financial inclusion and supporting agricultural sector of the country.
Chaudhuri was here to present a cheque of Rs 18.50 lakh to The Leprosy Mission Trust India for reconstructive surgery under the Corporate Social Responsibility initiative.
The move was taken in tandem with an awareness campaign on leprosy treatment in association with Rotary International District 3230 and Rotary Club of Guindy.