Which way will SBI rate dice roll? Hold your breath

Bangalore: Now, it’s SBI’s turn to take a call on whether it should increase base interest rates or not. The decision may come as early as Wednesday or Thursday.

[caption id=“attachment_37372” align=“alignleft” width=“380” caption=“RBI had raised the rate last month, and most banks have done so and others are in the process of doing so. Jayanta Dey/Reuters”] [/caption]

SBI chairman Pratip Chaudhuri told reporters here that the asset-liability committee of SBI is meeting today or tomorrow to take a decision. RBI had raised the rate last month, and most banks have done so and others are in the process of doing so. “You can expect most banks to raise the base rates between 25 and 50 basis points,” he said.

To a question, Chaudhuri said he does not expect RBI to hike the rate further in the quarterly review of monetary policy on July 26. “As of now, our view is it (the rate hike by RBI) will come with a lag…with a gap”, he said, adding, he would be surprised if RBI indeed raised the rate on July 26.

Responding to queries, he also said that with interest rate hikes, most of SBI’s corporate customers are “slighly reluctant” to take long-term loans. “Corporate sector is hesitant”, Chaudhuri added. “What we are slightly worried about is slack in the pace of (loan) sanctions.”

He said SBI logged net interest margin of 3.35 percent last year, but it’s currently growing at 3.5 percent-plus. “There is definite improvement of 15 basis points.”

(With inputs from PTI)