SBI chairman rules out any immediate cut in lending rates

SBI chairman rules out any immediate cut in lending ratesDespite the recent cut of 25 basis points in repo rate by the Reserve Bank of India (RBI), individual banks have no plans to bring lending rates down right away.

Pratip Chaudhuri, chairman of public sector lender SBI, yesterday ruled out any immediate cut in lending rates, saying that the repo rate cut announced by the central bank didn't give any room for a cut in lending rates.

Speaking on the topic, Mr. Chaudhuri said, "With repo rate cut, we don't get savings because our total repo borrowing is Rs 20,000 crore. If the RBI reduces rate by 25 basis points, the savings is Rs 50 crore. Total advances are Rs 5 lakh crore, which comes to one basis point."

SBI, India's biggest public sector lender, registered lower deposit growth in financial year 2012-13 as compared with the previous financial year.

Mr. Chaudhuri added that that a cut in the cash reserve ratio (CRR) would have given some room for a cut in lending rates. He declared that SBI would keep on offering loans and accepting deposits at the currently applicable rates.

As part of its monetary policy review, the RBI last week slashed repo rate by 25 basis points to bring it down to 7.25 per cent - the lowest since May 2011, while leaving the CRR unchanged at 4 per cent.

Any increase or decrease in interest rates by the SBI is often followed up by other public sector banks of the country. SBI had last slashed rates in January 2013 by 0.05 per cent.