State Bank of India (SBI) today indicated it could reduce lending rates in the next two-three weeks to boost credit growth.
"We had an ALCO (asset liability committee) meeting and there we did not cut the rates, but I am not ruling that out (rate cut). It could happen in the next two to three weeks," SBI Chairman Pratip Chaudhuri told reporters on the sidelines of World Economic Forum on India summit.
"Our rates are the best in the industry today, particularly from consumer finance, home and auto," he added.
SBI last reduced the base rate or the minimum lending rate in September this year. The base rate of SBI is presently pegged at 9.75 per cent.
Chaudhuri emphasised that there has been a strong co- relation between the reduction in interest rates and rise in demand for advances.
"We will see how the loan growth picks up. We are seeing a very strong co-relation as you drop the rates, the loan demand picks up very strongly," he said, adding that he would not be surprised if the home loan segment picked up by over 30 per cent in the current fiscal.
Last month, RBI in its half yearly review of monetary policy left the key interest rate unchanged but reduced cash reserve ratio by 0.25 per cent to infuse additional liquidity that will inject Rs 17,500 crore into the financial system.
Driven by huge inflow of deposits, SBI is currently having surplus liquidity of Rs 60-70,000 crore.
"With this kind of robust demand coming in, I have already said that we are very surplus in liquidity of about Rs 60,000-70,000 crore," he said.
"Deposit flow is so robust that today our biggest challenge is to deploy these deposits," he added.
When asked whether the bank would go for fund raising, he said, "If there is any debt raising it could be overseas raising. MTN would be the route because we have an enabling resolution for USD 10 billion. So there is enough room".
To a query related with NPAs, the SBI chief said it is spread across all the sectors.
"It is more pronounced in the infrastructure sector and sectors that are dependent on government for collecting the receivables (like construction sector and roadways)," he said adding, electricity board and other utilities too are the stressed sectors.
SBI stock price
On November 26, 2015, State Bank of India closed at Rs 242.75, up Rs 1.25, or 0.52 percent. The 52-week high of the share was Rs 335.90 and the 52-week low was Rs 220.60.
The company's trailing 12-month (TTM) EPS was at Rs 18.32 per share as per the quarter ended September 2015. The stock's price-to-earnings (P/E) ratio was 13.25. The latest book value of the company is Rs 165.49 per share. At current value, the price-to-book value of the company is 1.47.
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