Even as leading banks set their eyes on India’s largest public sector lender, State Bank of India (SBI), for a cue on increasing their savings deposit rates, SBI seems to be in no mood to raise this, at least for some time.
Chairman Pratip Chaudhuri on Tuesday ruled out any likelihood of an upward revision in these in the near future. “We are not going to increase these, at least for now. Among public sector banks, we will not be the first to raise the rates. Some private sector banks have already increased saving deposits rates. It does not make sense for a large bank like us to follow suit,” he told reporters here.
On October 25, the Reserve Bank of India (RBI) had deregulated the savings bank deposit rates and asked banks to determine their own. Banks are required to offer a uniform rate on deposits up to Rs 100,000, irrespective of the amount in the account; for savings deposits above Rs 100,000, banks can offer differential rates.
Chaudhuri expressed concern that raising deposit rates would have an adverse impact on net interest margins (NIMs). However, he refrained from commenting on the quantum of the impact. “We offer varied services to our savings account customers. Hence, deposit rates do not play a significant role in keeping our clientele intact. As long as the trust of our customers is there, we don't need to depend on interest rates to attract them,” he said. The public sector lender has about Rs 3,50,000 crore of savings deposits, and offers four per cent interest on these. Raising the deposit rates by one percentage point may put additional cost burden of Rs 3,500 crore.
NIM for the first quarter stood at 3.62 per cent, against 3.32 per cent in the last year. For the September quarter, the NIM is expected to be about 3.5 per cent. The bank has total deposits of Rs 9,50,000 crore.
On the macro economic scenario, Chaudhuri said though credit growth may continue to be positive, non-performing assets (NPAs) may be a concern over the next few months. “Several sectors, including agriculture, medium enterprises, exports, textiles and state-run power utilities, may put stress on NPAs. Gross NPAs may rise, considering the global and domestic economic conditions,” said Chaudhuri, adding credit demand from agriculture would remain robust, as the kharif harvest would pick up pace.
The bank has laid out an ambitious expansion plan for the next two years. “We are planning to expand our branch network in India and abroad. Presently, we are opening one branch each in Saudi Arabia and Qatar, where the opportunity of remittances is high. We plan to open eight branches in London by March 2012, and four in Bangladesh, too,” he said. SBI would also open branches in Nepal, Australia and New Zealand. “On an average, 40-50 overseas branches would be opened over the next two years, while 500 to 1,000 branches and 10,000 automated teller machines would be opened in India,” he added.
