India's largest bank State Bank of India reported an unexpected rise in bad loans during the quarter ended December, taking the shine off healthy growth in loan demand and interest income that helped it post a 15% year-on-year rise in net profit at Rs 3,263 crore for the quarter.
The bank plans to cut rates for education loans to accelerate credit growth, while keeping the base rate unchanged.
"In order to accelerate loan growth, we are contemplating a rate cut, particularly for education loans," said Pratip Chaudhuri, chairman, SBI.
The loan loss provisions jumped 84% to Rs 3,006 crore during the quarter. Non-performing assets rose to 2.2% of the total from 1.6% a year earlier.
Net interest income (the difference between interest earned and interest paid) grew by 27% to Rs 11,466 crore during the quarter, while non-interest income fell by 36% to Rs 2,126 crore.