Lets see. There is already a response and if there is evidence that lowering of rates lead to increase in business, then only we will lower rates. But already our base rate is the lowest. That (lowering of rates) will depend on what signal RBI gives, Chaudhuri told FE.
SBI recently lowered lending and deposit rates by 25 basis points but the move was not replicated by other public sector banks.
Most banks have not fully responded to the RBIs 50 bps rate cut in April, and that has kept bank lending rates high even though credit growth has slowed in tandem with a decline in the economic growth to a nine-year low of 6.5% in 2011-12.
Chaudhuri refrained from forecasting whether the RBI would lower rates this fiscal.
The SBI chief refrained from forecasting a rate cut by RBI now that economic growth was being forecast to fall below 6% by private analysts and as inflation has inched down to below 7% in July.
The slowdown in the economy has taken a toll on the asset quality of banks, including SBI, whose net non-performing assets rose to 2.22% at the end of June from 1.61% a year ago. But Chaudhuri said the bank was aiming to bring it down in the next two quarters.
Of course, we will bring it (NPA) down in second and third quarters. It is difficult to give a number. It depends on a number of factors that is outside the purview of the bank, he said, adding that NPAs have gone up because some companies have not got clearance or land for their projects. But it (NPA ratio) will look better in coming quarters, he said.
The global scenario looks gloomier and that will calibrate SBIs expansion plans. Overseas expansion makes sense if you can mobilise deposits. Without deposits, if you just have to lend, then it does not make much sense. Secondly, we are now present in almost all geographies, Chaudhuri said.
SBI was willing to expand where Indian companies increase their toehold. We will go wherever Indian companies go. When Adani buys a port in Australia or the Tatas go for a JLR (Jaguar Land Rover) acquisition, that is where we can go, because we can collateralise the Indian asset. We will like to follow the Indian companies. All these regions (Latin America, Africa and Asia) are on the radar but not in a big way, Chaudhuri said.
He ruled out overseas acquisitions, especially in Europe, saying such a move will only deplete the banks capital without ensuring high returns.
We have to pay a huge premium over the book (value) and that is capital depleting. The RoE (return on equity) in these businesses is not as high as in India. In India, my RoE is 17-18%. Why should I go there if RoE is lower In European businesses, RoE is 5-6%.