Country's largest lender State Bank of India (SBI) is 'keen' to cut interest rates in order to boost credit expansion, a top bank official said today.
'All sentiment is building towards it (an interest rate cut)...we are keen to do it,' the bank's chief financial officer (CFO) Diwakar Gupta said on the sidelines of an International Research Conference organised by the RBI.
Without indicating the timeline for the rate cut, he said, the bank would take a call on the issue after taking into account the 'spreads and profitability.'
The Reserve Bank of India last month reduced the Cash Reserve Ratio ( CRR), the portion of deposits that banks are required to keep with the central bank, from 6% to 5.5%, releasing Rs32,000 crore of primary liquidity into the system.
As regards SBI, the CRR cut would unlock Rs5,000 crore for the lender. Although the RBI did not cut its lending rates, the CRR reduction had raised hope of interest rate cut by the lenders. According to Gupta, a rate cut can happen even before the reduction of repo (short-term lending rate) by the RBI.
With the CRR cut, the bank stands to earn up to Rs500 crore over the year, he said, adding it enhances 'the ability (of SBI) to pass on the relief when the conditions warrant'.
The government too has recently approved Rs7,900 crore of fund infusion into the bank to help it expand business without sacrificing the capital adequacy norms. SBI, according to estimates, would be needing additional capital of around Rs16,000 crore next year.
The bank's lending book expands by around Rs1,50,000 crore every year and going by that figure it will require Rs15,000 crore to Rs16,000 crore in capital next year, Gupta explained.
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'All sentiment is building towards it (an interest rate cut)...we are keen to do it,' the bank's chief financial officer (CFO) Diwakar Gupta said on the sidelines of an International Research Conference organised by the RBI.
Without indicating the timeline for the rate cut, he said, the bank would take a call on the issue after taking into account the 'spreads and profitability.'
The Reserve Bank of India last month reduced the Cash Reserve Ratio ( CRR), the portion of deposits that banks are required to keep with the central bank, from 6% to 5.5%, releasing Rs32,000 crore of primary liquidity into the system.
As regards SBI, the CRR cut would unlock Rs5,000 crore for the lender. Although the RBI did not cut its lending rates, the CRR reduction had raised hope of interest rate cut by the lenders. According to Gupta, a rate cut can happen even before the reduction of repo (short-term lending rate) by the RBI.
With the CRR cut, the bank stands to earn up to Rs500 crore over the year, he said, adding it enhances 'the ability (of SBI) to pass on the relief when the conditions warrant'.
The government too has recently approved Rs7,900 crore of fund infusion into the bank to help it expand business without sacrificing the capital adequacy norms. SBI, according to estimates, would be needing additional capital of around Rs16,000 crore next year.
The bank's lending book expands by around Rs1,50,000 crore every year and going by that figure it will require Rs15,000 crore to Rs16,000 crore in capital next year, Gupta explained.
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