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| SBI may review interest rates on deposits by May end |
| BS Reporter / Kolkata May 08, 2009, 17:17 IST |
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State Bank of India, the country's largest bank, may review interest rates on deposits by May-end.
"We we will review interest rates at the end of May . In general, there seems to be softening of interest rates on deposits side," said O P Bhatt, chairman and managing director, SBI, on the sidelines of inauguration of an inward remittance cell in Kolkata on Friday.
Recently, SBI had reduced interest rates on domestic term deposits by by 25 basis points, with effect from May 4, across maturities.
"Our deposits rates are based on market and competition, and supply. Our deposits' market share has grown by 200 per cent in the past. We were receiving $200 million every day as deposits. In April also, our term deposits grew very fast. That is the reason, we felt that there was an excess of supply over demand, and we reduced the rates on deposits."
On being asked, if SBI was contemplating a cut in interest rates on lending, Bhatt said, "We are offering cheapest interest rates for every segment. We are giving cheapest home loan in the country at 8 per cent."
There has been an increase in non-performing assets and pressure on margins, he said.
Currently, on 1,000-day deposits SBI offers 8 per cent interests for deposits below Rs 1 crore.
SBI had last reduced its benchmark prime lending rates (by 75 basis points) in January this year. It has set a target of having 50 per cent market share in inward remittance processing.
Globally, the remittances have been to the tune of $300 billion, out of which the share of India is $45 billion, according to Bhatt.
"There was a time when Mexico was the largest receiver of remittances. Last year India overtook Mexico. Out of the total remittances, SBI's share is less than $10 billion. Therefore this percentage is still very small, and SBI should have atl east 50 per cent market share in remittances," said Bhatt.
In the foreign department of the bank, the total forex turnover of merchant transactions hads gone up from Rs 603,000 crores last year to Rs 966,000 crore, a growth of over 60 per cent, over the last year. said K Ramachandran, general manager, global markets unit--Kolkata.
"The total Nostro outstanding as on 31st March, every year, has been reduced by 50 per cent in the last three years. It was Rs 44,428 crore in 2006, Rs 24,982 crore in 2007, Rs 12,488 crore in 2008, and Rs 6,237 crore in 2009," said Ramachandran.
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