Did the India’s largest lender, State Bank of India (SBI), know that the repo rate hike by the Reserve Bank of India (RBI) was in the offing when it hiked its lending and deposit rates a day ahead of the monetary policy review on Friday?
According to some market experts SBI might have gotten the wind of what was coming. Senior bank officials, when contacted, would not respond. An e-mail on this issue sent to SBI remained unanswered.
Some analysts, however, had a contrarian explanation. “SBI, like others, was expecting RBI to reduce or maintain status quo on the repo rate. It would have been difficult for it to raise rates if the RBI had, as expected, cut it. So, SBI may have played it safe by hiking the rates just a day before monetary policy,” said a banking analyst with a Mumbai-based broking firm.
SBI on Thursday hiked its base rate by 0.1 percentage point, making home, car and other consumer loans costlier. The bank also hiked interest rates on fixed deposits in a rangeof 0.3-1.0 percentage points across maturities. Other major private lenders ICICI Bank, HDFC Bank and Axis Bank had hiked rates last month, but SBI did not follow suit then, saying that it had sufficient liquidity.