SBI to cut Interest rates

The country’s largest lender, State Bank of India, today said it will consider a cut in interest rates after the bankers’ meeting with Finance Minister Pranab Mukherjee scheduled for early next month.

“As far as interest rates are concerned, we will take a view after (bankers’ meeting with Finance Minister),” SBI Chairman O P Bhatt said after the launch of Defence Salary Package here.

There is enough liquidity. Credit is not strong at this point of time but it is expected to pick up during the year, he said. “There is definitely a softening bias (on interest rates). There is no chance of going up,” he said, adding that “perhaps they (interest rates) would come down.”

With inflation going down and sufficient liquidity make case for rate cut, he said, adding, “how much it will fall and to what extent would depend on the products mix and balance between asset and liability”.

Earlier this week, Mukherjee had said that he will ask banks for a “benign plan of action.”

Mukherjee had said, “Industry and business have been hurt by the cost of finance … The cost and the speed with which finance can be accessed remains a matter of concern.”

“One of the first steps I propose to take is to meet bankers and get them committed to a more benign plan of action,” Mukherjee added.

SBI last reduced the benchmark lending rate by 75 basis points to 12.75 per cent beginning this year. At the same time, the bank is offering home loans at a rate of 8 per cent.

Speaking about the Defence Salary Package, Bhatt said the product offers a bundle of free services to the Army personnel.

The package includes free drafts, free cheque book, free fund transfers to any of the SBI’s Group network of about 15,000 branches and free ATM cards, he said.

Bhatt said, the bank would also offers home, auto and personal loans to Army personnel at 25 basis points lower than the floor rate.

At the same time, bank is contemplating to launch special two-wheeler loan scheme for the Army personnel, he added.

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