The nation’s largest lender State Bank of India on Monday said the 90-basis points-reduction in the lending rates is likely to prop up its sagging loan growth and expects to boost the loan book to 8-9 per cent for the current financial year.
The lender had, yesterday, reduced its marginal cost based lending rate (MClR) by 90 basis points or 0.9 per cent across various maturities.
“The loan growth target we had given earlier was of 11-12 per cent. As of now it is only 6.7-6.8 per cent after the contraction in November and December. With this rate cut, we are hoping that we would be able to take it to 8-9 per cent,” chairperson Arundhati Bhattacharya told reporters.
She, however, said since there are three more months left for the year to close and in the next month or so loan growth numbers would be clearer.
In the steepest cut in recent years, SBI has reduced the one-year MClR to 8 per cent from 8.90 per cent and three year rates to 8.15 per cent from 9.05 per cent. Accordingly, the overnight MClR rate has been slashed to 7.75 per cent from 8.65 per cent.
Bhattacharya was quick to clarify that it is not a teaser loan which was frowned up on by the regulator in the past and then asked to discontinue.
She said between November 10 and December 30, the bank collected an incremental net deposit of Rs 1.65 trillion which pushed up its Casa accounts by a whopping 478 bps and she does not think these deposits are temporary.
“I think these deposits are pretty durable in the sense that we have not cut deposit rates, this is a liquidity driven rate cut which is unprecedented,” she said, adding the bank is sitting on an excess liquidity of Rs 1.40 trillion, on average after peaking at Rs 1.65 trillion from some time during the note-ban.