No immediate cut in lending rates, says SBI chairman

Written by ENS Economic Bureau | Updated: May 7 2013, 14:26pm hrs
Sbi'With repo rate cut, we don?t get savings because our total repo borrowing is Rs 20,000 crore.'
In an indication that the RBIs rate cut would not translate into action by individual banks, the countrys largest lender State Bank of India on Monday ruled out any immediate cut in lending rates.

With repo rate cut, we dont get savings because our total repo borrowing is Rs 20,000 crore. If the RBI reduces rate by 25 basis points, the savings is Rs 50 crore. Total advances is Rs 5 lakh crore, which comes to one basis points, said Pratip Chaudhuri, chairman SBI.

As part of its annual monetary policy review, the Reserve Bank of India had last week reduced repo rate by 25 basis points to 7.25 per cent, which is the lowest since May 2011, while choosing to leave the cash reserve ratio (CRR) unchanged at 4 per cent.

Chaudhuri however argued that a cut in CRR would have given room for a rate cut. The bank will continue with the same lending and deposit rate as of now, he said.

SBIs stance on interest rates is often followed up by other public sector banks as well. It had last cut rates in January this year by 0.05 per cent. The public sector bank also registered lower deposit growth in 2012-13 as compared to previous years. Our deposit growth last year was close to 15 per cent about 14.85 per cent. We did not have any wholesale deposit it was all retail, he said.

Meanwhile, Chaudhuri also said that the bank will consider merger of five associate banks in the second quarter of the fiscal. It is a collective decision. We have to consult the government also. Maybe in July-August we will start working on this (amalgamation of associate banks), he said, adding that the economic logic is strong for the proposed merger.

Banks recover R1K cr by selling assets of KFA

New Delhi: State Bank of India (SBI) on Monday said the consortium of lenders has recovered Rs 800-1,000 crore and is making all efforts to recover the remaining dues from beleaguered Kingfisher Airlines. KFA recoveries are going on. We have substantial amount of recoveries. Total recoveries for banks more than Rs 800-1000 crore, SBI chairman Pratip Chaudhuri said here. The consortium of 17 banks, led by SBI, has an outstanding of over Rs 7,000 crore from the carrier. It has shares of listed entities like United Spirits as collaterals which should realise Rs 500 crore.