 "Liquidity tight, need CRR cut to bring down rates: SBI chief")
Chennai: Admitting that liquidity conditions were tight, State Bank of India chairman Pratip Chaudhuri today made a case for reduction of the Cash Reserve Ratio (CRR) by the Reserve Bank to bring down overall interest rates for the benefit of industry.
“Indian industries are becoming uncompetitive because of higher interest rates. If you want moderation in interest rates, the most painless method is to cut the CRR),” Chaudhuri told reporters in Chennai.[caption id=“attachment_325229” align=“alignleft” width=“380” caption=“SBI chairman Pratip Chaudhuri. PTI”]  [/caption]
CRR, is the portion of deposits which banks are required to keep with the Reserve Bank in cash. On 9 March, the central bank had cut CRR by 0.75 percent to 4.75 percent. In January, too, RBI had reduced CRR by 0.50 percent to ease liquidity position in market.
RBI is expected to take a call on monetary measures in the mid-quarter review scheduled on 18 June.
On the liquidity conditions, Chaudhuri said, “It is better than earlier. But I still think the liquidity is still tight in our feeling.”
The bank, he added, is planning to reduce interest rates in the SME sector.
“It will be deep rate cuts ranging from two to three percent. Currently, rates range from 12-17 percent and it will be brought down from 10.5-15.5 percent,” Chaudhuri added.
Impact Shorts
More ShortsHe said that the bank will recruit 9,500 people across the country.
Chaudhuri said SBI’s net interest margin was good.
“Now, this has been possible due to a very good net interest margins. Our net interest margins are 3.85 on an aggregate and 4.17 for domestic, which is possibly highest,” he added.
Gross NPAs have dropped to 4.4 percent compared to 4.6 in the previous quarter and the net NPA has dramatically dropped from 2.2 per cent to 1.8 percent.
The bank has generated internal surplus of Rs 11,700 crore, he said.
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