With lending rates gradually moving up post frequent hikes in key rates by the Reserve Bank of India (RBI), the banks are reviewing their earlier credit off take targets for the current fiscal.

Following the latest round of hikes of key rates ?repo rate by 25 bps to 6% and reverse repo by 50 bps to 5%?the country?s largest bank, State Bank of India (SBI), in its mid-term review has revised its credit growth target downward by almost 3% during the fiscal

Confirming the development to FE, SS Ranjan, chief financial officer, SBI said, ?We have moderated our credit growth target to 18% from 21% projected for the current fiscal.?

Earlier, SBI had expected most of the growth in its loan book coming from the retail space including home loans and auto loans rates, which are set to rise as the banks are getting ready to hike their lending rates after RBI raised key rates to curb double digit inflation.

SBI chairman OP Bhatt had said that the bank?s retail loan book was growing at 20-21% year-on-year and should pick up further in the upcoming festival season.

The RBI, in its first quarter review, had projected non-food loans growth at 20% in 2010-11. Bankers, however, were optimistic that loan growth could be as high as 25% this year, given that relatively good monsoon could fuel more demand for agricultural lending and retail loans.

Ranjan further said that SBI is making efforts to achieve a higher net interest margin(NIM). ?The net interest margin (NIM) is likely to be above 3% as compared to existing 3.18%. We are looking at achieving a NIM of 3.25% by the end of the fiscal.? he said.

However, other major banks are hopeful that they may be able to achieve the projected credit growth target during the year.

MD Mallya, CMD, Bank of Baroda, said that the bank?s outlook for the credit growth has remained unchanged at 24-25% for the current fiscal.

?We have already achieved the credit growth of 26-27% on year-on-year basis so far during the current fiscal. Though we are yet to take a view on our interest rate, I do agree that pressure does exist on this front.??

The bank?s NIM is currently at 3.4% and it is sure of maintaining at that level by the end of the fiscal too.

MV Nair, CMD, Union Bank of India said that he is quite hopeful that the credit growth will happen thanks to the two factors including positive indications being given by the IIP number and the arrival of the festive season.

?The credit growth for my bank currently stands at 25% and we are likely to maintain it at this level for the fiscal too,?? he said.

DL Rawal, CMD, Dena Bank explained that the transmission of RBI policy always happens after a lag of 2-3 months. The credit growth may continue to happen now due to the festivals like Diwali and also the monsoon has also been good this year so far.

?Huge sanctions are already piled up with the bank. which are waiting for disbursements. At Dena Bank, the sanction was currently at Rs 5,000 crore. Bank?s NIM was currently at 2.82% and we would increase it to 2.90 by the fiscal-end,?? he said. Rawal said the deposit rates will go up during December only. As regards base rate, it will go up from January onwards. ?We have increased both BPLR and deposit rates in recent past. So, now the deposit rates will go up only once the credit offtake picks up. The deposit rates may go up by 25-50 basis points,?? he said