State Bank of India Chairman Pratip Chaudhuri, on Tuesday, said that the liquidity position in the country remained tight.

“Our feeling is that it [liquidity] has got tightened because of the Reserve Bank of India's intervention in the foreign exchange market,” he told presspersons here. Mr. Chaudhuri was here to participate in a CSR (corporate social responsibility) activity of SBI, Chennai Circle.

Every time the RBI intervened, it took out the rupee from the system.

To queries on whether SBI would reduce home loan rates, he said they were already under-10.5 per cent and could come down modestly if the RBI cut CRR (cash reserve ratio). SBI, he added, had decided to rebalance its portfolio and, as a part of that would cut SME (small and medium enterprise) loan rate next month. It would be “deep deep rate cut”, Mr. Chaudhuri said, adding that the new rates would be rolled out in the first week of July. The prevailing SME loan rates, between 12 per cent and 17 per cent, he said, were “very high” and, hence, would be brought down to 10.5-15 per cent. The proposed rate cut, he said, would not only help the bank grow the portfolio, but also improve the quality of the loans. SME loans now accounted for 12-14 per cent of total advances.

On when the bank proposed to seek review of the Moody's rating, Mr. Chaudhuri said the agency had downgraded only the perpetual debenture and the overall rating of the bank, same as that of the sovereign rating, was not affected. Nonetheless, the bank would be making a request for review to Moody's this week, he said.

He said the Stressed Asset Management Group formed by the bank was to help accelerate the recovery. Last fiscal, the group, which has nine offices in the country, made cash recovery of Rs.1,000 crore. Mr. Chaudhuri said SBI had not gone for bulk deposits. Instead, it mobilised deposits the hard way, the retail way. For savings account holders, it had introduced an accident insurance cover. Under this, the SB account holder would get an insurance cover of Rs.4 lakh on payment of Rs.100. The bank would be raising $1 billion Medium Term Notes and the money would be exclusively used for overseas operations.

As part of the CSR, the Chennai Circle donated an ambulance van and medical equipment to the paediatric centre of Adyar Cancer Institute.

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