Four PSBs may set base rates at 7.5-8.5%

At least four large public sector banks expect to set their base rates between 7.5 per cent and 8.5 per cent, the range indicated by the State Bank of India (SBI). While SBI is scheduled to announce its base rate on Tuesday, some of the other government may disclose their base rates later this week.

Punjab National Bank, the second-largest nationalised bank, expects its base rate to be in the range of 8-8.5 per cent, while Bangalore-based Canara Bank may set the rate between eight and 8.25 per cent, the respective chairmen said in Patna today.

The new system of base rates will come into effect from July 1 following a central bank guideline to bring in more transparent lending rates, replacing the present system of a benchmark prime lending rate.

Mumbai-based Union Bank of India may set its base rate between eight per cent and 8.5 per cent, Chairman M V Nair said after a meeting of bank chiefs and finance ministers of eastern and north-eastern states with Finance Minister Pranab Mukherjee in the Bihar capital.

Rana Kapoor, the chief executive of YES Bank, said he expected the base rate of private sector banks to be lower than that of public sector banks.

Speaking on the sidelines of the meeting, some bankers said they were witnessing a firm credit demand. “Credit offtake is good, as demand is coming from such sectors as steel, cement and infrastructure, like road projects,’’ said M Narendra, executive director, Bank of India.

Still, O P Bhatt, chairman of SBI, cautioned against rising non-performing loans. “The pressure on non-performing assets is likely to remain, as there is still stress on sectors like export, cement, corporate and small & medium sectors,” he said.