SBI RULES OUT IMMEDIATE INCREASE IN DEPOSIT RATES

The State Bank of India will not raise deposit rates in the near term like other banks which are attempting to correct an asset-liability mismatch with loan growth outstripping growth in deposits. SBIchairman OP Bhatt told ET that his bank was not planning to raise deposit rates as of now. The country's largest bank has raised deposit rates thrice in the past six months. The bank offers an interest of 9% on deposits for 555-days and for 1,000 days.

Mr Bhatt said SBI was targeting a loan growth of 22% and a 20% growth in deposits at a time when it is growing its deposits by 16% and loans by 18% YoY.

Last month, RBI had raised concerns relating to the gap between deposit and loan growth and the inclination of banks to borrow short term to fund long-term loans. For the banking industry, deposits rose by close to 16% while loans grew 24%.

However, top bankers had said there were unutilised deposits last year in the banking system, which is now being deployed for lending.

Mr Bhatt said SBI has started lending to microfinance institutions and plans to restructure MFI loans in Andhra Pradesh, where the sector suffered a jolt after the government issued an Ordinance restricting coercive practices and capping interest rates. "We are looking at restructuring of MFIs on a case-to-case basis," he said during his visit to Guwahati.

SBI's business in the North-East has crossed 50,000 crore. The region contributes close to 4% of the bank's total business. It plans to add 18 new branches to the tally of 538 in the region to consolidate its position here besides installing another 90 ATMs, which will take the number to 850.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/sbi-rules-out-immediate-increase-in-deposit-rates/articleshow/7456878.cms