The parliamentary standing committee on finance on Thursday asked State Bank of India (SBI) why the largest public sector lender had not declared its base rate and failed to meet its own deadline of June 15.
The committee members asked if SBI was waiting for private sector banks to announce their rates before it takes a call on the issue. The bank assured the committee that it would file a written reply soon. SBI had earlier hinted at a base rate of 7.5-8 per cent.
In its submission, SBI said the base rate would be the minimum rate for all loans and banks would not be permitted to lend below that. Therefore, it was an important decision to make, it said. Moreover, RBI has withdrawn the current stipulation of benchmark prime lending rate as the ceiling rate for loans up to Rs 2,00,000.
According to SBI, this would increase credit flow to small borrowers at reasonable rates and direct bank finance would provide effective competition to other forms of high-cost credit. This would result in an increase in credit off take. However, SBI sources, when contacted, declined to comment on the grounds that the meeting was confidential.
Several members expressed their disappointment as SBI was ranked among the top 1,000 banks in the world this year from a ranking of 64 in 2009. “SBI, in its presentation, informed if the rupee had not depreciated, SBI would have ranked 58 in the Banker magazine list. The committee wanted to know what efforts are being made by the bank to improve its global ranking.”
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