Bhatt sees SBI base rate at 8%

Country's largest lender State Bank of India (SBI) today said that the proposed base rate for the bank seems to be around 8 per cent.

"Base rate at this point seems to the around 8 per cent for the bank," SBI Chairman O P Bhatt told PTI on the sidelines of an AIMA event here.

The Reserve Bank of India (RBI) has proposed to replace the benchmark Prime Lending Rate (PLR) with base rates from April this year.

The base rate is the lowest rate that the bank can charge from a customer and is intended to bring about more transparency in the lending operations of banks.

SBI is at present looking into all the aspect of the base rate system proposed by the Reserve Bank and is yet to take a final call based on asset liability situation, he said.

Asked if SBI has approached the RBI for more time to migrate to the base rate regime, he said, "We do not intend to approach the RBI but possibly other banks may seek some relaxation for compliance."

Further, he said base rate would not translate into higher interest rate.

Asked about the merger of the State Bank of Indore with itself, Bhatt said, the merger should take place by March this year.

The bank is currently seeking regulatory approval from the RBI and thereafter it will go to the government for clearance, he said.

This will be the second such merger of its associate banks. In August 2008, the bank had merged State Bank of Saurashtra with itself.

Post merger, SBI will be left with five associate banks namely State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.

Among its associates the State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed on bourses.

Last year, the central board of SBI gave its approval for the merger of the State Bank of Indore with itself. Following this, the government of India also gave its in-principle approval to the merger.

SBI holds 98 per cent stake in the State Bank of Indore that posted a net profit of Rs 279 crore in 2008-09.

Asked if SBI would consolidate other associate bank, Bhatt said: "We are trying to do that direction has to come from the government."