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Sep 05, 2012, 07.03 PM IST
Country's largest lender State Bank of India is pulling strings to reduce fund cost. It is slashing retail term deposits rates by 50-100 basis points across tenures. Calling it part of rate rationalisation, SBI Chairman Pratip Chaudhuri says that lowering deposit mobilization is due to slowdown.
In an interview to CNBC-TV18 he said that the move is not going to set any direction for deposit rates in the industry. "Lending rate cuts will be determined by competition," he adds. Chaudhuri informs that the bank's car financing stands at 1,500-1,800 units/month.
As per the new slab, the revision in rate is for deposits up to five years. For deposits upto Rs 15 lakh, the new rate for 241 days to less than one year bracket is 6.5% (earlier it was 7.5%). For one year to less than 2 year time period, the new rate has been slashed to 8.5% as against 9%.
Here is the edited transcript of the interview on CNBC-TV18.
Q: We just have your fresh deposit rates and in some buckets like one year they have been cut by 1 percentage point to 6.5% for a one year deposit. First, why this cut? Two, what will it do to your margins?
A: Actually first I will answer this. The deposit rates for 241 days to less than one year was 7.5%, so it was slightly elevated. We did a rationalization of rates and made them simple. Current rates are up to one year it is 6.5%, below 15 lakh and 15 lakh and above is 7.5% and beyond that everything is 8.5%. No premium for higher deposit.
Actually we are sitting on a huge excess SLR from April till date. The deposits have grown by something like Rs 75,000 crore without taking retail deposits. The loans have grown only by about Rs 18,000 crore. So till we have enough loan growth coming in and the pipeline for the large value commercial loans are very weak. That's why we thought we would slightly slowdown our deposit mobilization efforts and we think that with this we should be able to protect our margins, because if we didn't do this our margins would have dropped.
Q: What is your expectation of margins by way of a figure?
A: The domestic margins should be between 3.85% and 3.90%.
Q: After this cut in rates what are you expecting your deposits to come down and rationalize to? As you indicated it stood at Rs 75,000 crore, where are you expecting it to be rationalized to now?
A: I don't think it would come down, because whatever has come in has come in, but the fresh flows maybe slower.
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