Will SBI up rates after the latest round of hikes in policy rates
I dont see any interest rate hike in the short-term. While there is upward pressure on interest rates, our view is that deposit rates have already moved up sharply and deposits have grown, so banks may not increase deposit rates further. But credit off take is not picking up as expected and once it starts picking up, only then rates will go up.
Also, the lean season is on its way. At SBI, we have the highest deposit rates and the lowest yields on advances. Our average cost of funds is 5.20%, whereas our special home loans fetch 8.5%. Even if we borrow from RBI or through CDs our costs will not go up because we have a loan book of R5.5-6 lakh crore and our dependence on outside borrowings is not much.
Experts say rates will go up by another 50-75 basis points
It is difficult to say if rates will keep moving up. But if inflation remains worrisome, there are chances of rates going up. However, most of the inflation is due to the supply side issues and if you keep on raising rates, youll hurt growth but wont solve the inflation problem.
Is the dispute over special home loans with RBI settled
Even the Economic Survey, approved by the PMO and the Planning Commission, appreciated our efforts saying that on such products, if you put any restrictions, it should be minimum and judicious. We dont have a product which RBI can call a teaser product. My philosophy has always been that our products should reflect the customers needs.
Are you trying to become the largest mortgage financier in the country
No way. Look at the average ticket size of our home loan, its only R12 lakh. I am sure HDFCs home loan size is much bigger. As I said we have to serve our customers well with right strategies.
What are your plans to raise capital
We are quite hopeful we will get the governments nod for our R21,000 crore rights issue. If it happens, then it will be enough to take the care of the banks funds requirement for the next three years.
How do you see your five year tenure, one of the longest in banks history
The bank has seen its balance sheet and profit double in the five years time since I took over. We had huge untapped potential in the rural space and I projected that the bank could add three times of its business from the rural banking, since we have more than 2,000 rural branches and another 4,700 branches in semi-urban areas. We are developing the business correspondent model with a high technology platform and have around 16-17,000 business correspondents which will triple in the next two years. The business correspondent model may not be profitable today but will make profits in couple of years and will contribute hugely to SBIs growth.
Did talk of ICICI Bank overtaking SBI bother But for the global financial crisis, ICICI Bank might have been much bigger bank today.
Frankly speaking it didnt bother me at all. Before the global economic crisis and during and after it we have proved that we are better than other in terms of our grasp of the Indian consumers needs and in serving them in a cost-effective manner.Whatever we do at SBI, it is being followed by every other bank in the country including the private sector and foreign banks.