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No beating about the bush.
SBI is at present looking into all the aspects of the base rate system proposed by the Reserve Bank of India and is yet to take a final call based on the asset-liability situation, its chairman has said
The country's largest lender State Bank of India (SBI) on Monday said that the proposed base rate for the bank seems to be around 8%.
"Base rate at this point seems to be around 8% for the bank," SBI chairman OP Bhatt told PTI on the sidelines of an AIMA event in New Delhi.
The Reserve Bank of India (RBI) has proposed to replace the benchmark Prime Lending Rate (PLR) with base rates from April this year.
The base rate is the lowest rate that a bank can charge from a customer and is intended to bring about more transparency in the lending operations of banks.
SBI is at present looking into all the aspects of the base rate system proposed by the RBI and is yet to take a final call based on the asset-liability situation, Mr Bhatt said.
Asked if SBI has approached the RBI for more time to migrate to the base rate regime, he said, "We do not intend to approach the RBI but possibly other banks may seek some relaxation for compliance."
Further, he said base rate would not translate into higher interest rates.
Asked about the merger of the State Bank of Indore with itself, Mr Bhatt said that the merger should take place by March this year.
The bank is currently seeking regulatory approval from the RBI and thereafter it will go to the government for clearance, he said.
This will be the second such merger of its associate banks. In August 2008, the bank had merged the State Bank of Saurashtra with itself.
Post-merger, SBI will be left with five associate banks—State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.
Among its associates, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed on the bourses.
Last year, the central board of SBI gave its approval for the merger of the State Bank of Indore with itself. Following this, the government of India also gave its in-principle approval to the merger.
SBI holds 98% stake in the State Bank of Indore that posted a net profit of Rs279 crore in 2008-09.
Asked if SBI would consolidate other associate banks, Mr Bhatt said, "We are trying to do that, (the) direction has to come from the government."