State Bank of India (SBI) Chairman O. P. Bhatt said here on Wednesday that he expected interest rates of banks to remain stable or decline further at the back of economic revival in the next three to six months.
He said he would not hazard a guess beyond the six-month period as economic conditions in the country and the world were dynamic and volatile. It was not possible to make long-term forecasts as nothing was permanent but “for the moment, interest rates continue to be stable or may decline,” Mr. Bhat added.
Talking to reporters after inaugurating a branch of the Corporate Accounts Group (CAG) of the bank, the sixth in the country, here on Wednesday, Mr. Bhatt said interest rates of the banking system — private, public or foreign — had been going down both on deposits and advances.
Explaining the steps taken by SBI to maintain comfortable liquidity position at the height of recession, Mr. Bhatt said the bank targeted an inflow of Rs. 1,000 crore a day and the scheme worked successfully for several weeks. Without specifying the reason, he said the deluge had stopped and the bank could mop up only Rs. 15,000-20,000 crore a month. The SBI Chairman said he expected the bank’s credit portfolio to rise by 25 per cent this year though its year-on-year growth rate was only 23 per cent. Mr. Bhatt did not anticipate loan waiver in the agriculture sector at the national level though he agreed it was a difficult year due to drought. He also said that it was difficult to guess at this stage how much drought would impact banking though he admitted recovery would be affected.