State Bank of India chief Arundhati Bhattacharya today said the cut in lending rates can only happen when credit picks up.
"What the banks are waiting for is a little bit more of a sign of a credit pick-up. Whatever we say, when we cut the lending rates our income comes down and we need some other ways of making up that income to keep paying interest on deposits. That can always happen if the credit growth is quite robust and volume picks up.
"But when the volumes are very thin and if you are not seeing that kind of a clear pipeline, then it is very difficult to cut lending rates. So, I think most of us are waiting to see a little bit more of a pick-up in credit," Bhattacharya told reporters on the sidelines of the bank launching the country's first economic indicator, SBI Composite Index today.
The credit growth is slowly inching up and is definitely better than the growth up to September, she said. "Retail growth is alright. On the corporate side also we are seeing a little bit growth now, though new projects are still a challenge," she said.
If the deposit rates are very high, it is difficult for banks to lower lending rates, the SBI chairman added.
In the second quarter SBI slashed deposit rates thrice, followed by reductions in October and November. Last week some other lenders such as HDFC Bank , ICICI Bank and IDBI Bank also reduced deposit rates.
"The fact that we are adjusting on the deposit taking side means that going forward all of us are seeing a rate cut. But exactly when it will happen is not something I can really tell you now," Bhattacharya said.
During the December 2 policy announcement, the Reserve Bank left key rates unchanged, while in the past 15 months it has increased rates by 75 bps to 8 percent.
Bhattacharya said a repo rate cut by the Reserve Bank may not have much of an impact on bank's cost of funds as lenders are borrowing very little from this window now as there is no demand for overnight money.
"If you see the liquidity condition of the banks, they are hardly taking anything from the repo," she said. Though repo rate gives a signal that things are looking to pick up but it does not make a difference in banks' cost of funds because banks borrowing from repo window is minuscule, she stated.
"I don't think a repo rate cut is going to make any big difference in our cost of funds. So, a 25 or a 50 bps cut doesn't really make all that a great difference," Bhattacharya said, adding that softening of money market rates does not have any impact on the bank as it doesn't access the market.
"All the banks are much more dependent on deposit rates rather than the money market borrowing and that is why deposit and rate of deposits play an important role for us."
Last week, RBI Governor Raghuram Rajan had chided banks not passing on the low interest rates to customers, thereby preventing monetary transmission, despite a steep 70 bps fall in money market rates since July.
Talking about the aviation industry, Bhattacharya said it is a very tough industry and it is not made easier with the kind of rules the country has.
On a specific query on SpiceJet , she said SBI does not have any exposure to the airline.
The troubled airline in the September quarter report had mentioned SBI, Allahabad Bank, HDFC Bank, ICICI and City Union Bank among others as its lenders.
Asked whether the bank will be looking at unlocking its value in its insurance businesses, Bhattacharya said, "Right now I don't know whether we will be doing it or not, but definitely we will look at the roadmap".
The much-awaited report of the Parliamentary Select Committee is believed to have endorsed most provisions of the Insurance Amendment Bill, including a composite cap of 49 percent for FDI and other foreign investments.
"We have to find out what our JV partners want. We have already talked to them but we have to see how it goes. We need to have some surety that the Bill is passed and only then things will be crystallised.
Anda sedang membaca artikel tentang
Lending rates can be cut when credit picks up: SBI
Dengan url
http://gayafashionshow.blogspot.com/2014/12/lending-rates-can-be-cut-when-credit.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Lending rates can be cut when credit picks up: SBI
namun jangan lupa untuk meletakkan link
Lending rates can be cut when credit picks up: SBI
sebagai sumbernya
0 komentar:
Posting Komentar