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Tuesday, May 7, 2013

SBI rules out immediate cut in lending rates

State Bank of India (SBI) ruled out any immediate cut in lending rates even as the Reserve Bank had reduced policy rate by 0.25 per cent earlier this week.

“With repo rate (short-term lending rate) cut, we don’t get savings because our total repo borrowing is 20,000 crore,” SBI Chairman Pratip Chaudhuri said here.

“So if you (RBI) reduce rate by 25 basis points, the saving is 50 crore. Total advance is 5 lakh crore which comes to 1 bps,” he said.

Had there been a cut in CRR, it would have would have provides room for cut, he said. The bank will continue with the same lending and deposit rate as of now, he added.

Earlier this week, RBI lowered the short-term lending (repo) rate to 7.25 per cent from 7.50 per cent, lowest since May 2011 while retaining the CRR for banks unchanged at 4 per cent.

Country’s largest lender SBI last reduced its lending rate in January by cutting it by 0.05 per cent.

Following the marginal reduction, SBI’s base rate, or the minimum rate of lending, came down to 9.70 per cent from 9.75 per cent.

Source: thehindubusinessline


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