| State Bank of India (SBI) Chairman O P Bhatt today admitted that excessive lending to certain sectors at some banks was a cause of concern.
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| He, however, defended the lending pattern of banks saying it reflected the trends in the economy.
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| The entrepreneur decides where to invest and banks only fund the bankable proposals they receive, Bhatt said on the sidelines of a seminar on banking technology.
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| He said liquidity with SBI was enough to meet the growth in demand for loans. SBI has over 100 million customers.
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| Asked whether he would welcome a lowering of statutory liquidity ratio (SLR), Bhatt said it would make no difference to the country’s largest bank.
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| The bank’s investments in government securities to meet SLR requirements are about 30 per cent of liabilities, against the minimum required 25 per cent.
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| “We have a lot of room. We can fund out loans growth by selling SLR investments,” Bhatt said. The union cabinet recently approved a proposal to amend the Banking Regulation Act to allow the RBI freedom to decide what the minimum SLR requirement should be.
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| Growth in bank deposits is lagging near-record lending in an economy that has grown at the fastest pace since the country’s independence in 1947.
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| SBI expects its loans growth to be around 25 per cent in the financial year ending March 31, 2007, from around 30 per cent a year earlier.
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| SBI raised its prime lending rate by half a percentage point from December 27 to 11.5 per cent. |
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