Ruling out any immediate rise in lending rates, the State Bank of India said it will wait for the Reserve Bank of India's policy meeting on April 20 before taking a decision on rates for deposits and advances. SBI is India's largest bank.
In an unscheduled move late on Friday, RBI had raised its key borrowing and lending rates by 25 basis points to curb inflationary expectations in the economy. Thus, the rate at which banks borrow from RBI will be 5 per cent, while the interest banks get on deposits from the central bank will be 3.5 per cent.
SBI Chairman OP Bhatt, speaking to reporters after the inauguration of a new branch here on Monday, said the rise in the two rates was unexpected, though there have been indications of monetary tightening since January.
Bhatt also said that RBI could raise the interest rates or the cash reverse ratio by 25 basis points in the policy for 2010-11. To signal the reversal of easy money policy, RBI in the third quarter review of monetary policy had raised the ratio by 75 basis points.
There is enough liquidity with excess funds to the tune of Rs 600-700 billion (Rs 60,000-70,000 crore) in the system. Liquidity will not decline till credit does not grow. Credit growth is inching up in a muted fashion, he said.
