State Bank of India on Tuesday hinted that lending rates would rise from the second quarter of 2010-11, even though there was no immediate pressure on interest rates.
“So far as bank lending rates are concerned, I do not expect lending rates going up before May-June,” SBI Chairman O.P. Bhatt said.
Money supply is under pressure, but interest rates will remain stable in the immediate future, Bhatt said. “(There is) pressure on liquidity, but no immediate pressure on interest rates.”
The Reserve Bank of India, in its recent monetary policy review, had asked banks to keep more cash with it, expected to shrink money supply by Rs 36,000 crore from the system.
The apex bank’s move to hike the cash reserve ratio (CRR), the amount of deposits banks keep with the RBI, by 75 basis points (100 basis points is 1 percentage point) to 5.75 per cent will come into effect from February 13 in two tranches.
ICICI Bank Chief Executive Officer and Managing Director Chanda Kochhar had also said earlier that there would be upward pressure on interest rates from the second quarter of the current financial year, as demand for investment would increase.
SBI chairman added that its associate bank SBI Indore will be merged into it by March-end.