Expect LCR framework to help banks manage liquidity efficiently, says Dinesh Khara

On net interest margin (NIM), Khara said that they should be able to maintain NIM at the current level.

The Reserve Bank of India’s liquidity coverage ratio (LCR) review framework would help banks manage liquidity efficiently, State Bank of India chairman Dinesh Khara has said.

“In my assessment, banks were keeping as much as Rs 50,000 crore for extra liquidity. Expect the LCR framework to help banks have better and more efficient liquidity management,” Khara said in an interaction with CNBC-TV18.

Recently, RBI governor Shaktikanta Das said the central bank would soon issue a draft circular to review the LCR for banks.

“A need has arisen to undertake a comprehensive LCR review for banks. A draft circular will be issued for stakeholder consultation,” Das said.

LCR refers to the proportion of highly liquid assets held by banks to ensure that they meet their short-term obligations. It helps banks to meet their financial requirements in the short term.

Also read: RBI to issue draft circular on LCR review for banks, says governor

Khara added that the state-owned bank hoped to exceed the guidance it gave for FY24 on credit growth.

“Based on the current environment, we should get to see better credit growth numbers in FY25,” Khara said.

On the net interest margin, Khara said SBI should be able to maintain NIM at the current level.

In the December quarter, SBI’s NIM was at 3.22 percent. The lender reported a credit growth of 14.38 percent on a year-on-year basis.