Credit growth seen at 20% next year: SBI

State Bank of India (SBI), which had lowered its loan growth target in the current financial year on account of low credit offtake, on Wednesday said credit growth in 2010-11 was likely to improve to around 20 per cent.

“This year, it may close at 18 per cent. Credit growth is picking up...It may rise to around 20 per cent next year,” SBI Chairman OP Bhatt told reporters on the sidelines of a conference here.

The Reserve Bank 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 their cost of funds will go up when they start computing the savings deposits rates post-April, as directed by the Reserve Bank of India. The central bank 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.

Bank lending rates were likely to remain stable in the near future, Bhatt said.