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Updated: November 15, 2010 22:36 IST

Interest rates headed higher: SBI chief

Special Correspondent
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O. P. Bhatt. Photo: Kamal Narang
The Hindu O. P. Bhatt. Photo: Kamal Narang

State Bank of India (SBI) Chairman O. P. Bhatt on Monday warned that liquidity conditions combined with loan growth could push interest rates upwards in the coming days.

“Interest rates have a slightly upward bias due to liquidity combined with more credit offtake, which is going to take place. So these two together may push up interest rates,'' Mr. Bhatt told reporters on the sidelines of the India Economic Summit, organised by the World Economic Forum and the Confederation of Indian Industry here.

Asked about current liquidity conditions, Mr. Bhatt said the situation was comfortable.

Liquidity had come under pressure owing to the huge public issue of Coal India, besides a surge in spending during the festival season.

On the upcoming euro bond issue by SBI, Mr. Bhatt said "We are planning for euro bond. We would like to go for road shows next week." The nature of the issue was such that details on the quantum of bonds could not be divulged, he said.

Asked if the size of the issue would be eruo 500 million, he said “it could be. We are expecting to raise a benchmark-size five-year euro bond.'' On the cost of funds for India's largest bank, he said it had been stable during the past one month. The cost of funds of many banks had come under pressure owing to an increase in deposits rates by many banks following a series of tightening measures during the year.

According to Ben J. Verwaayen, CEO, Alcatel-Lucent, France, India started to grow when it combined talent and connectivity with the world. “We need the same Internet penetration as we have seen with voice in the country,'' he added.

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