SBI loan portfolio seen rising 40% in FY06

The country's largest bank, State Bank of India (SBI),  expects its loan book to grow by a whopping 40 per cent year on year in 2005-06, after a 28.14 per cent increase in 2004-05.

As on 31 March, 2005, SBI's advances stood at Rs 2,02,374 crore, up by 28.14 per cent from the previous fiscal's figure of Rs 1,57,934 crore. Its advances as on June 30, 2005 had increased to Rs 2,20,523 crore.

SBI sees its deposits growth lagging with a 20 per cent year-on-year increase in 2005-06, amid demand for credit being witnessed across all sectors, SBI managing director and group executive (corporate banking), T S Bhattacharya, said at a seminar on banking organised jointly by FICCI and Indian Banks' Association. He also categorically made it clear that SBI will not lend to stock brokers for speculative activities.

On the exchange rate movement, Bhattacharya said SBI expects the rupee to fall because of widening trade deficit and higher oil prices.

"Oil prices are quite a big worry for the country as a whole. The Indian currency has fallen 0.7 per cent this week to 10-month lows, because of heavy import payments for defence and oil purchases," he said.

Standard Chartered Bank expects its loans and deposits growth in India to be in the range of 15-20 per cent, the bank's India CEO, Neeraj Swaroop, said.

Swaroop said while lending rates are primarily driven by competition and perceptions of risk, deposit rates have also been under pressure for a while now.

Due to this, the entire industry has been experiencing difficulty in maintaining wider margins.