Sbi Mulling Over Cut In Plr

This was disclosed by SBI chairman P G Kakodkar here today. He said the SBI, which had revised its PLR from 16.5 per cent to 16 per cent recently, would take a decision on a further rate cut within a week.

He said the RBI report published last month had indicated a sharp decline in advances and a corresponding increase in the deposits in the first four months of the current fiscal.

SBI's advances have gone down by Rs 2,600 crore while deposits have gone up by Rs 1,800 crore during the period, saddling the bank with a surplus investible funds.

 

He said not only the PLR should be revised, but the deposit rates, too, should be lowered to discourage any unviable swelling in deposits. Kakodkar attributed the fall in the advances to the delayed budget, which hampered the finalisation of the annual budgets of corporates.

This has primarily led to the fall in advances in almost all the commercial banks, he said and hoped that the situation might improve by October when the corporates actually put their annual plans in place.

The deposits of commercial banks, on the other hand, have moved up despite several large and lucrative debt instruments by financial institutions like IDBI, IFCI, SCICI in the last few months.

Agreeing that the current deposit rates are incongruent with the prevailing inflation rate, Kakodkar said there is danger in pushing down the interest rates of deposits beyond a point as the attractive rates offered in various debt instruments now may result in flight of deposits from the banks to the debt market beyond a manageable scale.

Stating that the deposit interest rate offered by SBI beyond the RBI stipulated one-year period currently stands at 13 per cent, he said and any readjustments in it has to be considered against the constraints posed by a booming debt market. Outlining his immediate plan of action for the bank, Kakodkar said he is committed to the implementation of the Mckinczee report on restructuring and business development.

As per this report, we have three objectives for the immediate future: delayering of the staff structure; opening of corporate account group branches; and a shift in our strategy from growth with profit to profit with growth.

He said the bank has already opened a corporate account group branch in Mumbai which is currently handling accounts of 55 corporate houses with the provision of single-window solution facility.

Three more such branches are scheduled to be opened in Delhi, Calcutta and Madras, he added.

Stating that there are 130 loss-making branches in the state, he said the bank intends to turnaround the performances of 30 of these branches within the current year.

He said out of the 464 SBI branches in Orissa, 85 per cent are rural and semi-urban centres where the business potential is low. However, ruling out the possibility of closure of any loss-making branches or turning them into satellite branches, he said the issue would be handled through a three-pronged strategy: reducing overheads, redeployment of staff and increasing the business through breaking into new areas.

He also announced that two specialised branches would be set up in the state to handle only SSI accounts.