SBI has hiked short-term corporate loan rates

The country's largest lender State Bank of India (SBI) has not taken any final decision about continuing its home loan teaser rates but it has hiked short-term corporate loan rates by 0.25-50 basis points.

SBI chairman OP Bhatt, said, “With surplus liquidity gradually disappearing from the system, we have re-priced certain segments of our short-term corporate loans by 0.25-0.50 bps upwards.” He added at present bank has no plans of hiking its deposit rates and agreed that liquidity will remain in the system. SBI said the public sector units will be giving out close to Rs 18,000 crore for 3G auctions.

“We have got requests and demands for that kind of money. At the maximum we will lend Rs 18,000 crore. Having said that, we are still having a surplus liquidity of Rs 26,000,” Bhatt said. On an average there is still a fair amount of liquidity in the system. If you see, the 10-year government security bond is close to 7.40%. There is not much pressure on the liquidity at the moment. It is too early to say if the impact on liquidity will have a temporary or a permanent impact on the liquidity condition,

Meanwhile, Union Bank of India CMD MV Nair said the bank would be giving out Rs 2,000 crore for 3 G auctions. “Liquidity will not be impacted with the money flowing out as we already sitting on adequate liquidity,” he said. Regarding bad loans, Bhatt said in the last few quarters NPAs have decreased and that the worst is over. Talking about recent credit growth numbers, Bhatt agreed there is no improvement in credit growth and it can be due to the drooping season.

He added, “Usually in April there is always a negative growth. So it is too early to say if it is because of the slack season or if there is more to it”.