Home loan rates to rise, says SBI

Shortage of cash may prompt move, says CFO.

State Bank of India (SBI), the nation’s largest lender, may raise home loan rates further, Chief Financial Officer S S Ranjan has said. A shortage of cash in the banking system might lead to higher interest rates, he said.

Mumbai-based SBI, yesterday raised its minimum lending rate by 40 basis points to eight per cent. A basis point equals 0.01 percentage point.

During the last quarter, banks’ per day borrowings from the central bank more than tripled to the most since 2000, according to Reserve Bank of India (RBI) data. The nation’s continued economic expansion required accelerating credit growth, which might be hampered by the cash shortage, Ranjan said.

SBI shares declined 2.7 per cent to Rs 2,744.85 as of 2:26 pm in Mumbai. The stock climbed 26 per cent last year. ICICI Bank, the largest non-state bank, fell 3.6 per cent to Rs 1,103.45 today.

RBI, which increased interest rates six times in 2010 to combat rising inflation, has signaled it may resume monetary tightening after keeping borrowing costs unchanged at a December 16 meeting.

SBI expected credit to expand 18 per cent in the year ending March, Ranjan said.

PTI adds: SBI would set up a branch in Doha during the first quarter of 2011, a senior bank official said.

“The new office should start functioning by March,” Satyajit Pratap, CEO-designate for the branch, told Qatar Tribune on Monday.

According to the report, the bank had sought authorisation from the Qatar Financial Centre Regulatory Authority to open a whole sale banking unit.

The opening of a business office in Doha was an important part of SBI’s aggressive global expansion programme, he added.

The bank, which has set up an overseas banking unit at its headquarters in Mumbai to assess and explore its expansion activities abroad, is keen on increasing its global footprint.

Given the growing opportunities in Qatar and around, SBI has been planning to enhance its presence and business profile in the country and the Gulf region in a big way.