The country's largest lender State Bank of India (SBI) today said it was not in favour of hiking lending rates despite the Reserve Bank's 12th consecutive rate increase last month.
"We had contemplated that (interest rate hike). Right now indications are that the margins are quite robust and the net interest income for the September quarter is also pretty good. That is why we didn't think it was necessary to hike the rates," SBI Chairman Pratip Chaudhuri told reporters here.
Additionally, "a hike in rates will also make us uncompetitive," he said, adding early next week SBI's asset liability committee will meet to take a final call.
A majority of the lenders have refrained from hiking rates after the RBI hiked its key rates by 25 basis points in a mid-quarter policy review on September 16.
Two mid-sized private lenders, ING Vysya and Dhanlaxmi, are the only ones that have passed on the rate increase to their customers following the RBI move.
SBI's base rate, or the minimum rate of lending, stands at a competitive 10 per cent following the increase effected after the July policy hike of 50 bps.
The SBI Chairman said bankers, who met RBI Governor D Subbarao yesterday as part of the customary pre-policy meet before the credit policy announcement on October 25, had asked for a pause in hikes due to weak global cues.
"Indicators are not very favourable. So we told RBI that in this context, if you again go in for a rate hike, it will only make the matters worse," Chaudhuri said.
In a bid to curb the uncomfortably high inflation, which stood at 9.78 per cent in August, RBI has raised its key policy rates a record 12 times over the past 19 months.
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