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'RBI unlikely to change interest rates'

State Bank of India Chairman OP Bhatt has said RBI expected to keep benchmark interest rates unchanged in the forthcoming credit policy review later this month.

india Updated: Oct 04, 2008 20:00 IST

Reserve Bank is expected to keep benchmark interest rates unchanged in the forthcoming credit policy review later this month, State Bank of India Chairman OP Bhatt said on Saturday.

"For the moment liquidity situation is definitely tight. Inflation has come down and it unlikely that it would go very much high. So in this scenario it difficult for me to imagine that interest rates would be raised by the RBI," he said in New Delhi.

Reserve Bank is scheduled to announce its mid-term policy review on October 24.

As regards the lending and deposit rates, Bhatt said, these rates depend upon each bank's liquidity profile and individual asset-liability position.

"For the moment interest rates seems to have peaked," he said, when asked whether there was a possibility of interest rates moving northwards.

SBI chief, however, did admit that there is liquidity problem as the short term-interest rates are rising and repo borrowing in high.

The problem of tight liquidity position, he said, "would be addressed... By RBI intervention or release of money in the system as a result of implementation of Sixth Pay Commission."

Asked about the bank's exposure to instruments of troubled American financial institutions, Bhatt said, SBI had USD 5 million exposure in instruments of Lehman Brothers. This is negligible given the balance sheet size, which is over USD 200 billion.

"Beyond that I am not aware we had any other exposure," the SBI chief said.