×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

SBI says liquidity tight, interest rates may go up by 25 bps

SBI says liquidity tight, interest rates may go up by 25 bps
Comment E-mail Print Share
First Published: Mon, Jun 14 2010. 07 41 PM IST
Updated: Mon, Jun 14 2010. 07 41 PM IST
Patna: The country’s largest lender State Bank of India on Monday said the liquidity position in the system is tight and interest rates can go up by 25 basis points in the coming months.
“There is an upward bias on the rates...If any bank increases it, it will be a minimum of 25 basis points,” SBI chairman OP Bhatt told reporters on the sidelines of a bankers conference here today.
The chairman, however, clarified that the position will be clear only after the RBI monetary review scheduled for 27 July. The central bank will have to draw a balance between the need to fuel economic growth and contain inflation which has crossed the double-digit mark (10.16%) in May.
“There is an upward bias (in the interest rates). The position will get crystalised only after the July monetary policy, because then we will know what they (RBI) are thinking of and what they want us to do,” Bhatt added.
The liquidity position has tightened after the banks mobilised resources to fund telecom players which had won the bids for spectrum, besides providing for advance tax payment due by tomorrow.
Even finance secretary Ashok Chawla had admitted to liquidity crunch and had said, “the current crunch in liquidity is a temporary phenomenon and will last for two to three weeks.”
The banking system had arranged funds for the 3G spectrum licence fees of over Rs67,700 crore last month-end. Another Rs38,000 crore-plus would go out of the system by way of payment towards the BWA (broadband wireless access) spectrum licence by 22 June.
On the implementation of the base rates from 1 July, Bhat said SBI is fully prepared for the new interesr rate regime. “We have already indicated that the base rate would be between 7.5% and 8.5%,” he added.
Under the new dispensation, each bank will have to decide a base rate and lend funds to the borrowers at the declared rate depending on his credit profile. The new system would replace the existing benchmark prime lending rate (BPLR) mechanism.
Comment E-mail Print Share
First Published: Mon, Jun 14 2010. 07 41 PM IST
More Topics: SBI | OP Bhatt | Liquidity | Rates | Interest Rates |