State Bank of India chairman O P Bhatt said on Friday no increase in interest rates is expected in the near future, allaying apprehensions on the return of the tight money policy.
"Hike is extremely unlikely," Bhatt told PTI when asked whether the rates of borrowing could be revised upward in the next few months.
He said the SBI [ Get Quote ] was lending at the 'lowest rates' and any more cut was not on the cards.
In the recent past, the country's largest bank has been aggressive in cutting the lending rates, especially for those buying homes and cars. It is extending both these loans at eight per cent interest per annum.
"I am not prescribing a tight money policy", he said, pointing out that fiscal and monetary policies adopted by the government and the RBI to combat the slowdown are paying dividends and the signs of recovery have started to show up.
RBI, which has considerably eased the monetary policy to provide liquidity to the crisis-hit industry, is slated to announce second quarterly review of the monetary policy on October 27.
With rising food inflation, there is an apprehension whether the RBI could return to the high interest regime which was followed by the central bank mostly in 2008.
Bhatt, who attended the first meeting of the task force on micro, small and medium enterprises, said two sub-committees have been formed to go into the problems of finances of the MSME sector.
These sub-committes would present their report within 30 days to the task force which was announced by Prime Minister Manmohan Singh [ Images ] on August 26.
The 11-member task force is headed by prime minister's principal secretary T K A Nair. Members of the Task Force include Planning Commission member Arun Maira, finance secretary Ashok Chawla, labour secretary PC Chaturvedi and secretary MSME Dinesh Rai.
While the task force reviewed the problems of financing faced by the small businesses, Bhatt said, "No targets have been set."
The industry representatives have been demanding that banks should be given specific credit targets for the MSMEs.
The industry has been asking that the share of micro units should be increased from present level of 4.9 per cent to 6 per cent of the banks' priority sector lending.
The MSME sector is also seeking bank loans at par with the farm sector or at less than 8 per cent.
There are about 2.61 crore (26.1 million) Micro, Small and Medium Enterprises in the country which contribute 40 per cent in India's exports.