SBI, ICICI do not see CRR hike having rate impact

State Bank of India (SBI) and ICICI Bank, the two largest commercial banks in the country on Tuesday said that the Reserve Bank of India's decision to hike Cash Reserve Ratio (CRR) will not have an immediate bearing on the interest rate situation.

"There will be no immediate impact,'' SBI Chairman A K Purwar said on the sidelines of a banking conference organised by the Federation of Indian Chambers of Commerce and Industry here.

ICICI Bank CEO K V Kamath echoed the statement adding, that interest rates will remain unchanged as the system was flush with liquidity.

The RBI on Saturday announced that CRR would go up by 50 basis points to five per cent in two tranches of 25 basis points each on September 18 and October 2.

Kamath went on to say that the liquidity situation was a result of larger and larger savings driven by strong economic growth. Funds that were earlier deployed into government papers will now flow towards meeting the CRR requirements, he said.

Besides, he said "As long as there is no reversal in growth and savings, there will be little change in interest rates," There is little possibility of the economy slowing down, he said, adding, the project pipeline of the top 300 companies extends to Rs 200,000 crore.

Meanwhile Kamath reiterated that ICICI Bank had no intention stepping into the consolidation mode, at least for the next 18 to 24 months. "Our investments in Banks remain investments. We are not looking at any targets. We believe in growing organically and will continue to do so."