- 'Buy' SBI shares: Liabilities are its only assets, target price Rs 1,933, says CitiFreefalling BSE Sensex drops another 290 pts as Indian rupee hits record low of Rs 63 to US dollarState Bank of India raises interest rate on bulk deposits by up to 1.5 pct, fixed deposit rates at 8.25 pctPM Manmohan Singh pep-talk lifts Sensex by 219 pts to over two-week high, TCS shares hit all-time high
A day after steeply hiking bulk deposit rates, SBI chairman Pratip Chaudhuri on Saturday ruled out any hike in lending rate, although many private sector banks have done so due to the uptick in the cost of funds following RBI's liquidity squeezing moves.
"Currently no," said the head of the nation's largest lender when asked if a base rate hike is being planned following its up to 150 bps hike in bulk deposit rates. Top private sector lenders such as ICICI Bank, Axis Bank and HDFC Bank have raised their base rates or the minimum lending rate following the recent tightening by the Reserve Bank to arrest the fall of the rupee since July 15.
The domestic currency has lost more than 21 per cent against the US dollar since April. Industry insiders say state-run banks may not increase lending rates due to "diktats from the Finance Ministry".
Andhra Bank, whose chairman B A Prabhakar retires tomorrow, is the only PSB which has hiked its rate by 0.25 per cent early this month.
He said Andhra Bank's move is an exception as "the cost of funds is quite modest. Our base rate has always been low, that is our hallmark because deposit collection is efficient. Our average cost of funds is only 6.7 per cent."
Chaudhuri, who will be retiring by next month-end, said the bank has decided to raise rates -- generally seen as a precursor to a similar action on lending rate -- on deposits of over Rs 1 crore. State Bank of India has the smallest composition of such bulk deposits, the pricing of which the bank raised by up to 1.5 per cent yesterday.
However, there will not be any deposit rate hike for deposits under Rs 1 crore, the SBI chairman said.
In a series of moves, including capping banks' overnight borrowings, RBI has squeezed the liquidity, sending short-term rates to a high of 300 bps to 10.25 per cent.
Chaudhuri reiterated that banks with a higher reliance on short-term instruments like certificate of deposits and commercial paper are the ones raising their rates.
Meanwhile, he said the bank will announce the name of one associate bank for merger by end of September.
When asked his reaction to the dismal GDP data of 4.4 per cent for the April-June quarter, Chaudhuri said: "As a banker, it does not affect me. Stock market people give a PE multiple base on growth, but as a banker I am only