'Credit growth in FY11 likely to be around 20%'

State Bank of India (SBI), which had lowered its loan growth target in the current fiscal on account of a low credit offtake, today said credit growth in FY 11 is likely to improve to around 20 per cent.

"This year, it may close at 18 per cent. Credit growth is picking up... credit growth in the next fiscal (FY 11) may be around 20 per cent," SBI Chairman, O P Bhatt, told reporters on the sidelines of a conference here.

Reserve Bank of India (RBI) has a loan growth forecast of 18 per cent for Indian banks in 2009-10.

Referring to the banks' demand to lower the savings bank deposit rates or to maintain status quo, the SBI Chairman said rates of savings account deposits should be lowered to contain the cost of funds of banks.

Banks fear that their cost of funds will go up when they start computing the savings deposits rates post-April, 2010, as directed by RBI.

RBI may marginally hike the cash reserve ratio, the percentage of funds banks have to park with the central bank, marginally, at its quarterly policy late this month to suck out excess liquidity from the system, he said.