SBI sees 20% credit growth

Pratip Chaudhuri says many existing corporate clients had been approaching for refinance owing to low interest rates

Despite low demand from new corporate houses, the overall credit growth for State Bank of India is expected to go up to 20 per cent for the current year on the back of a strong retail demand.

SBI chairman Pratip Chaudhuri today said the demand from personal and home loans had been robust and also many existing corporate clients had been approaching for refinance owing to low interest rates.

Responding to a question, he said the bank would consider raising the short-term rates if there is a flight of deposits as a couple of banks had increased short-term deposit rates. However, he sees little possibility as depositors are tend to be lazy in taking these decisions. Deposits are expected to grow at 16 per cent for the current year, according to him.

"Savings deposits carry 4 per cent interest while the seven-day deposits carry 6.5 per cent interest. How many of you go for short-term deposits," he asked the media in a lighter vein here.

Though there was no upward pressure on rates, there is little scope for lowering the interest rates as the banks still rely on high-cost deposits and borrowings.

"The treasury bills went for 11.5 per cent. Government will borrow the cheapest.  It is only natural that banks will borrow at a little more higher rates followed by the corporates," he said.

He said interest rates on short-term instruments were higher compared with 10-year bonds because there were issues with the availability in short-term liquidity. The bank is expected to maintain the net interest margin at 3.6 per cent for the whole year.