While there is a global credit crisis hitting the world’s leading banks, the country’s largest bank is cruising in profit mode, but is in no mood to reduce lending rates to stoke demand-led growth.
The State Bank of India (SBI) said on Monday it would maintain “status quo” on lending rates even though there were signs of that softening in the coming months.
“Interest rates have peaked. You could see some moderation in coming months,” SBI Chairman OP Bhatt said after announcing a 40 per cent increase in net profit during the second quarter ended September 2008 compared with the same period a year ago.
Bhatt said inflation was beginning to moderate and there was adequate liquidity in the system.
“Interest rates in short term is likely to be stable while in medium term it would moderate,” he said.
The Reserve Bank of India has so far pumped in Rs. 1,65,000 crore more into the banking system to help their liquidity needs and carry on lending, but industry representatives say this is not enough.
Bhatt said SBI has not slowed down lending because of liquidity problem and the bank’s advances during the second quarter jumped up by 162 per cent to Rs 51,020 crore. “The internal credit expansion target is 26 per cent for the current fiscal,” he said.