May reduce interest on deposits, home loans.
The country's largest lender, State Bank of India (SBI), has decided to reduce its prime lending rate (PLR) 75 basis points, effective November 10, SBI Chairman OP Bhatt said here today.
The bank is also examining the possibility of reducing its deposit rates 50 basis points.
"We are also examining a cut in home loan rates by half a per cent. This is bound to happen because 80 to 90 per cent of the housing loans in India are taken by the low- and mid-income sectors. Even a 25 per cent fluctuation in home loan EMIs makes a huge difference for them. There could be corrections in the real estate prices as well, which could spur demand for home loans in the coming months," Bhatt added.
The bank has increased its market share in the home loans market from 17.25 per cent in March to 18 per cent in September.
"Over the last two months our deposits have been growing at Rs 1,000 crore a day and we have not stopped lending to any sector. We are yet to decide the time for reducing deposit rates, but we are examining it," said Bhatt, adding that the bank's credit-deposit ratio is 74 per cent at present.
Commenting on liquidity, he said there is going to be some pressure next month when the busy season starts and government borrowings increase.
| KIND CUTS BANKS THAT HAVE CUT prime RATES 75 BASIS POINTS (Figures in %) | ||
| Earlier | Now | |
| State Bank of India | 14 | 13 |
| Dena Bank | 14.25 | 14 |
| Indian Overseas Bank | 14 | 13 |
| Oriental Bank of Commerce | 14 | 13 |
| Central Bank of India | 14 | 13.25 |
| State Bank of Travancore | 14 | 13.25 |
| Canara Bank | 14 | 13.25 |
| Andhra Bank | 14 | 13.25 |
| Allahabad Bank | 14 | 13.25 |
| BANKS THAT HAVE CUT RATES 50 BASIS POINTS | ||
| Citibank | 15.5 | 15 |
SBI also plans to raise Rs 5,000-10,000 crore as Tier-II capital — capital raised via debt — through subordinated bonds by December this year.
Bhatt added that the Indian banking sector would require greater capital infusion in the coming months on account of higher demand for funds from companies and increased provisions for higher non performing assets (sticky loans).
Bank of India has also cut interest rates on home loans by 75 basis points across various maturities. Now, the highest rate for home loans up to Rs 30 lakh will be 9.25 per cent. The rate for the Rs 30 lakh to Rs 50 lakh bracket will be 10.25 per cent. Consumer loans will attract 12.75 per cent against 13.50 per cent before.
