SBI to take call on hiking base rates soon

State Bank of India will take a call on increasing base interest rates on today or tomorrow, chairman Pratip Chaudhuri said. He said that after the RBI raised key short-term borrowing and lending rates last month, most banks have increased their rates and others are in the process of doing so.

State Bank of India will take a call on increasing base interest rates on Wednesday or Thursday, chairman Pratip Chaudhuri said.

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He told reporters that the asset-liability committee of SBI is meeting Wednesday or Thursday to take a decision.

Chaudhuri said that after the RBI raised key short-term borrowing and lending rates last month, most banks have increased their rates and others are in the process of doing so.

"You can expect most banks to raise the base rates between 25 and 50 basis points," he said.

To a question, Chaudhuri said he does not expect the RBI to hike the rate further in its quarterly review of the monetary policy on July 26.

"As of now, in our view is it (the rate hike by RBI) will come with a lag... with a gap," he said, adding that he would be surprised if the RBI indeed raised the rates on July 26.

Responding to queries, he said with the hike in interest rates, most of SBI's corporate customers are "slightly reluctant" to take long-term loans.

"Corporate sector is hesitant," Chaudhuri said.

"What we are slightly worried about is slack in the pace of (loan) sanctions," he added.

He said SBI logged a net interest margin of 3.35% last year, but it is currently growing at 3.5%-plus.

"There is a definite improvement of 15 basis points," he said.