SBI chief says global rate rise won't affect India

State Bank of India (SBI) chairman A K Purwar does not expect domestic interest rates to follow global interest rates, expecting interest rates here to remain "stable".

While he acknowledged that domestic interest rates cannot be expected to go down, he did not expect them to rise either despite global rates hardening.

"Global interest rates are still much lower than Indian rates, and hence we are looking at a stable interest rate environment," said Purwar. He added that as corporates have diversified their borrowing options in a major way, "the banking sector has been affected."

SBI has seen a nine per cent growth in advances and expects to close fiscal 2004 with a 12-13 per cent growth as opposed to its earlier target of 16 per cent.

"The 16 per cent target does not seem achieveable this year but next positively we should see a growth of 16 per cent as a lot of financial closures should take place by March end," said Purwar.

SBI's optimism is largely on account of its focus on infrastructure projects to be funding both through deposits as well as long term funding. "We are diversifying our lending portfolio and there are a number of power projects under consideration among other infrastructure projects. This should help credit offtake grow by 16 per cent," said Purwar.