Interest rates will not rise: SBI boss
State Bank of India (SBI) on Wednesday hinted that it might not hike interest rates immediately as liquidity remains sufficient in the system despite the expected cash outgo on 3G auction and advance tax payments.
“I think there is enough liquidity in the system on an average, there is still a fair amount of liquidity in the system,” SBI chairman, Mr O.P. Bhatt, told reporters on the sidelines of an RBI-organised event.
Nearly Rs 70,000-crore is expected to go out of the system next week owing to payments by telecom companies. This, together with the advance tax outgo in mid-June, is feared to drain out around Rs 1,00,000-crore from the banking system.
Mr Bhatt, however, added that it is early to say whether the impact on liquidity from the 3G payments will have a temporary or permanent impact on the liquidity conditions.
SBI has been approached by telecom firms for loans of as much as Rs 18,000-crore to make their payments for 3G spectrum and the lender is likely to disburse nearly half of that amount, Mr Bhatt said.
“We have requests (from telecom companies) for that kind of money (nearly Rs 18,000 crore)... that is at the upper end. We may provide roughly half of that,” Mr Bhatt said.
Also, the country’s largest lender is unlikely to increase its deposit rates in the immediate future, Mr Bhatt said.
However, with surplus liquidity gradually disappearing from the system, SBI has repriced certain segments of its short-term corporate loans by 0.25-0.50 per cent upwards, he said.
Commenting on the bank’s non-performing assets levels, Mr Bhatt said that the NPAs have started coming down in the last few quarters and “the worst is over”. — PTI
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