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Despite inflationary pressure, there will be no increase in the interest rate on loans in the next six months because of surplus liquidity in the market and rising deposits
The country's largest lender, State Bank of India (SBI), has said that there will be no hike in lending rates in the next six months as there is surplus liquidity in the market, reports PTI.
Despite inflationary pressure, there will be no increase in the interest rate on loans in the next six months because of surplus liquidity in the market and rising deposits, SBI chairman OP Bhatt told reporters.
Mr Bhatt said that there is a good amount of liquidity in the market and credit offtake is slowly picking up.
Referring to the ongoing merger process of SBI associate banks, Mr Bhatt said that SBI is a major stakeholder in SBI associate banks like State Bank of Saurashtra and State Bank of Indore.
"In fact, we did not have less than 75% stake in any of these banks and owned 100% in State Bank of Hyderabad and State Bank of Patiala which were with us for the last 50 to 60 years," he said.
State Bank of Saurashtra has already merged while the process was on with regard to State Bank of Indore, Mr Bhatt said.
The merger would improve SBI in terms of efficiency in operation, release of capital, economies of scale and avoiding waste and duplication. "More importantly, we are getting good quality people," he said.
However, the merger process, he said, should not be viewed in terms of a benefit as it was a process of restructuring within a family.
The SBI chairman did not think that the Indian economy had been affected by the recession. "The recession did not hit India the way it had affected European countries last year. There was only a slowdown in the growth rate which came down to 7% from 9%," he said.
Replying to a question on withdrawal of stimulus package by the government in the prevailing situation, Mr Bhatt said that the bailout package should not be taken back but 'phased out'.
Mr Bhatt claimed that the 8% interest on home loans announced by the SBI had provided market stability.
Buyers have started coming back and the cement and steel sectors have started improving, he said and also ruled out any further cut in the interest rate. In fact, SBI has forced other banks to follow suit, he added.
About SBI's tie-up with an Australian company to enter the general insurance sector, Mr Bhatt described it as “a meeting of minds” as it was looking for a partner for the purpose.
Mr Bhatt said, "The Australian company has the best technology, risk and product management (tools), whereas we have a large captive clientele to tap," he said.