State Bank of India (SBI) is unlikely to cut its base rate in FY16 and will examine it only next year, chairman Arundhati Bhattacharya said on Friday. The bank’s base rate is 9.3% at present.
Speaking to reporters after inaugurating the bank’s 12th Intouch branch, Bhattacharya said that the new base rate calculation, based on the marginal cost of funds, will not make any huge difference to the base rate, albeit enabling faster transmission.
Asked about further base rate cuts, she said, “I don’t really think so, but may be once we cross the year end then we will see.”
“We have not seen there will be any huge amount of difference (in using marginal cost of funds),” she said, adding that some more transmission will definitely happen but “I don’t think it is going to be humongous”.
Private-sector lender HDFC Bank had recently cut its base rate by 5 basis points (bps) to 9.3%, effective December 28. This puts the bank on par with SBI, which had reduced its base rate by 40 bps in September after the Reserve Bank of India (RBI) cut interest rate by 50 basis points, while ICICI Bank’s base rate is 9.35%. Most public sector banks have a base rate of 9.5% or more.
She explained that the public-sector lender will focus its branch opening strategy based on the customer profile. “We are trying to change the branches based on the kind of customer profiles we see in those places. Where we are seeing the customers are getting younger and they are digitally-savvy, in those localities we will have branches like this (Intouch),” she said.
Bhattacharya added that this strategy will showcase its digital abilities and on the other hand, where customers do not need much help in transactions, there will be more of advisory services. “Definitely the entire branch strategy will be geared towards finding the right kind of branch for the right kind of clients.”