SBI to review short-term interest rates: AK Purwar

Mumbai, Nov 14 | Updated: Nov 15 2005, 06:13am hrs
The State Bank of India (SBI), country's largest commercial bank is reviewing its short-term interest rates. The bank's chairman, AK Purwar said, that there was a pressure on short-term rates to rise following the upward revision of reverse repo by 25 basis points in the latest credit policy of Reserve Bank of India (RBI).

"Any hike in interest rates is a sensitive issue, as SBI sets the trend for the Indian banks to follow. We are currently reviewing the short-term rates, and will be taking a decision soon," he said on the sidelines of the President's meeting organised by World Federation of Diamond Bourses (WFDB) and International Diamond Manufacturers Association (IDMA) in Mumbai, on Monday.

Mr Purwar, however, refused to comment on interest rates for the medium- and long the long-term, saying that the bank would have to take a look at them. Meanwhile, the bank is planning to tap the market with a Tier-2 bond issue aggregating Rs 3,300 crore, in 2-3 weeks' time. Of this amount, about Rs

1,000 crore or over $200 million would be raised via foreign funds. "The structure has been finalised and the timing will be announced shortly. Of the Rs 3,300 crore, a little over $200 million will be apportioned for foreign investors," said Mr Purwar.

Meanwhile, the bank has forwarded a proposal to the central government to remove the ceiling of 200 shares that an individual can hold, in the three of its listed subsidiaries- State Bank of Travancore, State Bank of Mysore and State Bank of Bikaner & Jaipur.

Regarding this, Mr Purwar said: "It will require an amendment to the SBI Act as well as Articles of Association Act and the proposal is lying with the Parliament. If it comes through, it will provide substantial liquidity in their stocks."