Looks like public sector banks are ready to spare their customers of any rate hikes for the time being. Taking a lead in this regard, State Bank of India, the country?s largest commercial bank, decided on Saturday to maintain a status quo on rates. On Wednesday, the Reserve Bank of India had hiked repo rates by 25 basis points in an attempt to rein in inflation.
SBI?s assets and liability committee (ALCO) met for two consecutive days here before finally taking a decision to take a pause on rates. ?We have decided to maintain the status quo for the time being,?? said a senior official of the bank.
Earlier, chairman OP Bhatt had indicated that SBI might absorb the impact of repo rate hike. Other major public sector banks also indicated that they might follow SBI decision in maintaining the status quo on rates.
?It is not necessary to increase the rates as response to a repo rate hike. Our ALCO will meet to take a final decision on this,?? said MBN Rao, Canara Bank chairman and managing director, the third largest state-owned bank. Rao said the bank would prefer to use excess SLR to generate liquidity of its own. Canara Bank has around 30 % SLR portfolio.
Similarly MV Nair, chairman and managing director, Union Bank said, ?Unless we borrow money from RBI, we are not affected by the repo rate hike.?
Immediately after the repo rate hike on Wednesday, ICICI managing director and CEO KV Kamath had said the bank?s liquidity position was comfortable and ?we would watch the situation before taking any decision on rates?.
However, an SBI official maintained, ?We have kept our options open for the future development.??
A few days back the bank had effected an increase in its rates on term deposit of up to 50 basis points.