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SBI says no immediate rate hike

Source: PTI
April 06, 2010 17:59 IST
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The nation's largest lender State Bank of India on Tuesday said it will not hike its lending rates immediately but will wait for further signals from the Reserve Bank's forthcoming annual monetary policy.

"I do not see a hike in interest rates immediately. We have to wait for the RBI policy on April 20," SBI chairman OP Bhatt said on the sidelines of the Indo-US financial and economic partnership meeting.

Last month, the RBI had lifted its repo and reverse repo rates (short term lending and borrowing rates in that order) by 0.25 per cent each to 5 per cent and 3.75 per cent, respectively to cool off the runaway inflation, which has shot past the RBI's forecast of 8.5 per cent by March.

The wholesale price-based inflation rose to 9.89 per cent in February from 8.56 per cent in the previous month due to increase in prices of certain food items and fuels. Responding to the RBI's policy measures, many leading bankers opined that they would wait and assess market conditions before reviewing their interest-rate structure.

Bhatt further said SBI is well capitalised and that there is no immediate need for capital. However, he added, it would have to raise capital in the medium to long term. "At the moment, SBI is well capitalised at around 14 per cent. There is no immediate need for capital but at some point of time we have to raise capital in the medium to long term," he added.

He further said he would prefer a rights issue of Rs 10,000-20,000 crore (Rs 100-200 billion) by next fiscal for this.

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