State Bank of India (SBI), India’s largest bank, had excess liquidity to the tune of Rs 70,000-80,000 crore, said Chairman Pratip Chaudhuri on Monday. He said the bank was investing the surplus liquidity in commercial paper of companies, certificates of deposit issued by other banks and government treasury bills, depending on the kind of return. SBI had about Rs 11,000 crore worth of funds invested in commercial paper, he added.
SBI holds 5-5.5 per cent of statutory liquidity ratio (SLR) over and above the mandated level of 23 per cent by the Reserve Bank of India (RBI).
“In the first five months, deposits have grown eight per cent,” he said. Loan growth has lagged at four per cent in the same period. He said the bank might clock 20-22 per cent growth in automobile and home loans as disbursements are expected to pick up in the second half of FY13.
SBI recently cut its base rate and benchmark prime lending rate by 25 basis points (bps) each to boost credit growth.
SBI will also reduce effective lending rates for small and medium enterprises, retail and education loans from December 1. “For the bank, this reduction would amount to lower interest income to the extent of Rs 1,250 crore per year. We expect to compensate this by attracting additional business,” he said.
In terms of capital requirement, SBI does not require additional funds till 2015, said Diwakar Gupta, chief financial officer.
According to him, SBI and associate banks will need about Rs 1 lakh crore to meet the Basel-III norms which will come into effect in 2015.