SBI: Interest rates may decline
By Neelima Shankar
Oct 31, 2008
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Country's largest lender, State Bank of India anticipates the interest rates to come down in the coming times. The Bank expects this to happen due to the recent liquidity infusing measures to taken by the RBI.

Chairman of SBI, O P Bhatt said, "Interest rates have peaked. You could see some moderation in coming months." He further added that the banking system has adequate funds at the moment and therefore in the medium run interest rates may soften. "In this context, interest rates in the short term are likely to be stable, while in medium term they would moderate," said the banker.

Also, SBI plans to maintain "status quo" for its lending and deposit rates for now. The bank did not reduce its lending even at the times of liquidity crisis. In fact its lending raised by 162% to Rs 51,020 crore during the second quarter of the current fiscal.

The net profit of SBI at the end of September 30th stood at Rs 2259 crore up by 40.2% from Rs 1,611.4 crore recorded during the corresponding quarter of the previous year, where as, its total income grew by 31% to Rs 17,909 crore as against Rs 13,658 crore in the same period a year ago.

Almost all the banks are expecting a fall in their interest rates in the coming times because of the reduction in CRR and Repo rate by the RBI. Both these measures have helped the banks to check a hike in their funds and therefore they expect a fall in both their lending and deposit rates.


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