The country?s largest lender, State Bank of India, said on Saturday it had no plans to hike lending rates immediately. While SBI chairman OP Bhatt said the bank would wait for further signals from RBI to take a call on hiking the lending rates, financial services secretary R Gopaplan cleared the air on whether the government, as in the past, would intervene directly or indirectly and ask banks not to raise the rates following the RBI move to hike key rates.
Gopalan said PSU banks have been asked to maintain a net interest margin (NIM) of 3% and return on assets (ROA) of 1% amid rising rates and asset liability mismatch due to a host of other factors.
On Friday, RBI hiked repo and reverse repo rates by 250 bps to 5% and 3.75%, respectively, to rein in inflationary pressures. Major lenders like ICICI Bank, Bank of Baroda, and Punjab National Bank said they wouldn?t hike their lending rates immediately.
The banks had said they would wait and watch to take any such decision.
“There is no plan to hike our lending rates immediately. We will wait till RBI?s April policy,? Bhatt said at a function here. He added SBI also had no plans to discontinue its 8% home loan scheme immediately and would review the move by March end.
Bhatt, however, said the central bank was expected to further tighten its monetary policy in its 2010-11 annual monetary policy next month. ?Further monetary tightening is expected in the April policy and key rates may go up by another 25 basis points,” he said.
The liquidity and rate scenario had remained dynamic and constant reviews were necessary to assess the situation and respond adequately, he said, while adding there was sufficient liquidity in the banking system and the credit growth had been muted.
While SBI has set a target of 20% credit growth in the next finanical year on the back of improving demand, it could take a Rs 200-300-crore hit owing to mark-to-market (MTM) losses due to rising yields, said Bhatt.
Gopalan, who was also in the city, said even though the government had a set a minimum target on NIM and ROA, it wouldn?t do anything contrary to hinder banks? growth. ?Banks have the responsibility of managing their balance sheets and should be free to adjust to the new realities,? he said.
On whether the country could still achieve the projected the growth rate of 8-8.5% in a scenario where rates have started firming up, Gopalan said growth couldn?t happen unless inflation was kept in check. ?With good rabi crops and expected sound monsoon, the situation from inflation point of view is expected to improve soon. Though RBI takes decision on rates, it has been in constant discussions with the government on various issues. It would be wrong to say that RBI would do anything to hamper growth,? he said.