By IANS,
Kolkata : The country’s largest lender, State Bank of India (SBI), will raise interest rates by 25 to 100 basis points after Diwali, a top company official said here Monday.
“If there is huge amount of credit growth, which I believe would happen with economic growth picking up, the interest rates will go up,” said SBI Chairman O.P. Bhatt.
“I see interest rates going up by 25-100 basis points after Diwali. It all depends on the management of liquidity,” Bhatt told reporters on the sidelines of an ongoing banking conference.
Talking about the bank’s plans of merging subsidiaries with itself, he said there were no immediate plans for across-the-board mergers.
“Only one bank is currently being merged with us. The boards of both the banks have passed the resolution and so the process is on. There is no other bank merger on the horizon,” Bhatt said, adding that he was pro-merger but not the sole decision-maker.
The SBI board approved the merger of State Bank of Indore with itself last month, the second after State Bank of Saurashtra.
Bhatt expects the State Bank of Indore merger to be completed in three to six months after getting the government’s approval.
Talking about the bank’s performance, he said SBI witnessed a marginal credit growth of Rs.4,000-5,000 crore quarter-on-quarter in the first three months of this fiscal.
Regarding SBI’s plans to foray into non-life insurance business, the bank had received in-principle approval from Insurance Regulatory and Development Authority. “We expect to start the business by early next year.”
SBI is planning its non-life insurance venture with an Australian company.
Among other projects on the anvil, Bhat said SBI’s custodial service would start this year, with the approval expected in the next three-four months.
SBI has inked a 65:35 joint venture agreement with French financial services firm Societe Generale Securities Services (SGSS) to provide custodial services.
Bhatt, however, denied eyeing Bank Eksekutif of Indonesia for acquisition, or that SBI’s Chicago branch would be wound up.
The Federal Deposit Insurance Corp in the US has said that SBI’s Chicago branch needed to improve its compliance with Community Reinvestment Act that encourages banks to meet local credit needs.
“Those were only suggestions,” Bhatt said.