No plan to slash lending rates, says SBI chief

'Priority is to intensify NPA recovery, reduce time for stressed assets' resolution; no merger with associates this year'

The country’s largest lending entity, State Bank of India, has no immediate plan to cut lending rates, given the level of inflation. However, it might cut deposit rates.

It has also decided against merging any of its associate banks with it in the current financial year, due to capital constraints and shortage of time on hand.

In her first formal interaction with journalists after becoming chairperson, Arundhati Bhattacharya said the bank’s Asset/Liability Committee will take a final decision on cutting or raising rates.

Currently, SBI offers the lowest rates on home and car loans.

A Krishna Kumar, managing director, said the bank was not reducing the home loan rates as these were already at par with the base rate.

Bhattacharya said the government’s missive to public sector banks on reducing interest rates to increase the consumer loan business was not “directed lending”. There was no external pressure, she said.

On business growth, she said the pace of retail asset expansion was steady, while the bank was selective about corporate lending. It would look at companies with investment grade and growth potential.

She stressed the battle on non-performing assets (NPAs), by way of effort to arrest slippages and improve the recoveries, was to be intensified. SBI will revamp structures and simplify processes to reduce the time for resolution of NPA cases.

On consolidation within the group, she said the merger of associate banks was a long process. It also needed capital and half the financial year was over. The process might start this year but completion might not take place. Pratip Chaudhuri, her predecessor, had left the decision in this regard to his successor.

Earlier, it had been stated that SBI was to announce in September the name of the next associate bank it would be merging with itself. A panel headed by A Viswanathan, managing director, for merger of the associate banks has given  a report, preparing the groundwork and economic logic.

SBI has five associates — State Bank of Hyderabad, State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Mysore and State Bank of Patiala. Two others, State Bank of Indore and State Bank of Saurashtra, were merged with SBI in 2008 and 2010, respectively.

The new chairperson has also proposed removing the cap of two transfers on ‘spouse grounds’ for both female and male employees. She is also considering introducing a longer sabbatical (leave on loss of pay) for employees, especially women, similar to the scheme she introduced in SBI Caps, when she was heading it. At present, SBI Capital offers leave without pay for up to six years.