SBI informs loans rate not likely to decline

Speaking to the media person on the sidelines of a seminar organized by the Confederation of Indian Industry (CII), T S Bhattacharyya, the managing director of State Bank of India said, that the interest rates for the short- to medium-term lending were not likely to come down for the time being. He also added that raising funds through deposits from non-resident Indians were drying up due to the appreciation of the rupee against the dollar.

Bhattacharyya said, “The resources for the long-term lending are growing very slowly and in addition to this, the cost of funds is also on the rise, so there is no likelihood of interest rate easing out for the short- and medium-term loans as of now.”

He said, “The lack of resources for long-term lending is acting as a constraint against the lending rates.” He informed that the banks have to earn enough money from the corporate and industrial sectors to cover up for the subsidized rates and the regulatory compliances. “The cost expectation is linked with the decision of the regulator along with the ability of the banks to reduce cost,” Bhattacharyya said.

Bhattacharyya also maintained the demand for credit in the industrial infrastructure sector has increased particularly for steel and power plant units.

However, the chairman showed a concern regarding the sustainability of small-sized steel plants.

“The prices that they are getting today would not be there every time and hence an organized approach is needed for their survival for they would suffer individually in the long run,” he said.