Corporates are reconsidering expansion plans
The Reserve Bank of India's decision to increase interest rates recently has led to a scenario where credit growth will come down from the expected 19-22 per cent to 16-19 per cent, State Bank of India Chairman Pratip Chaudhuri said here on Tuesday.
As a result of the increased interest rates, major corporates were now reconsidering their expansion plans, he told presspersons here after laying the foundation for the Currency Administration Branch of the bank.
About the likely increase in lending and deposit rates, Mr. Chaudhuri said there did not appear to be any such indication. It would be discussed at the bank's Asset Liability Committee meeting scheduled later this week where interest rates would be reviewed.
He said the net interest margin (NIM) of the bank could increase in the current fiscal from 3.25 per cent to 3.5 per cent.
It would be driven by the discontinuation of home loans at 8 per cent in the first year of loan, hike in base rate from 8.5 per cent to 9.25 per cent and increasing acceptance of the hike by the corporates, he added.
Mr. Chaudhuri said the bank's net non-performing assets (NPA) that now stood at 1.62 per cent might come down by 25 basis points. “NPAs do not mean that all is lost because repayment could begin soon after a gap. A loanee who has paid six out of ten instalments does not necessarily mean he or she is not going to pay further. About merger of SBI's associate banks, he said State Bank of Indore merged with SBI in 2010 and the issue of State Bank of Hyderabad or others would be considered again in 2012 only.