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SBI, ICICI set to announce base rate

June 29, 2010 10:06 IST

State Bank of India would announce its much-awaited base rate on Tuesday, Chairman OP Bhatt said on Monday. On how much will the rate be, Bhatt said, "Not more than 8 per cent. . . 8 per cent or less."

No bank has announced its base rate yet. The rare will replace the existing benchmark prime lending rate from July 1. All banks are waiting for cue from the largest lender, which has around 17 per cent of the loan market. Some large public sector banks like Union Bank of India and Bank of Baroda have said they will keep their base rate at 8-8.5 per cent.

Another large lender, Punjab National Bank, which will hold its board meeting tomorrow, is expected to announce its base rate after that.

Bhatt said the rate might make certain loans more expensive, though he did not specify the categories.

SBI's chairman, however, declined to comment if the bank would extend its special home loan scheme. The offer, which charges 8 per cent in its first year and 9 per cent in second and third years, will expire on June 30.

"The offer is there till June 30, we will take a view on that issue also," Bhatt said.

On liquidity, Bhatt said the situation might improve next week and SBI might not have to borrow from the repo window of the Reserve Bank of India (RBI). "There is a dramatic shift in liquidity, from surplus to deficit since early June. We are also borrowing from RBI. We should not be borrowing from next week onwards but at the moment we are," he said.

On whether the bank was planning to hike its deposits rates, Bhatt said it would wait for RBI's first quarter review of monetary policy scheduled for July 27 before taking a decision.

ICICI Bank to announce base rate on June 30

ICICI Bank has said it would announce its base rate on June 30. The bank also recommended a dividend of 120 per cent at its annual general meeting (AGM) on Monday.

"We just concluded our annual general meeting which saw all resolutions being passed unanimously. We have recommended a dividend of 120 per cent," Chanda Kochhar, managing director and CEO of ICICI Bank, told reporters on the sidelines of the AGM in Vadodara.

Later in the day, speaking in Mumbai, Kochhar said the bank would announce its base rate on June 30.

The current rates would be "adjusted according to the base rate," she said after the board meeting in Vodadara. The base rate regime comes into effect from July 1.

According to Kochhar, the dividend recommendation is a result of a rise in the group's consolidated profits. "Our subsidiary, ICICI Life Insurance, has earned profits for the first time in financial year 2009-10, which is a year earlier than we expected," she added.

Meanwhile, ICICI brand had been rated among the Top 50 Global Brands and valued at $ 14.5 billion by BrandZ, a brand management firm, Kochhar said at the AGM.

ICICI Bank, whose extraordinary general meeting had approved the amalgamation of Bank of Rajasthan (BOR), registered profit after tax of Rs 4,025 crore for financial year 2009-10 as against Rs 3,758 crore for 2008-09. The bank booked a consolidated profit after tax of Rs 4,670 crore.

BS Reporter in Mumbai
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