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SBI contemplating further cut in lending rate

Press Trust Of India
Feb 02, 2009 at 01:50pm IST

New Delhi: The country's top public sector lender, State Bank of India, today said it is considering further reduction in lending rates.

"There is thinking (on these lines)," SBI Chairman O P Bhatt said when asked if there is a possibility of reducing the benchmark prime lending rate (PLR) by the bank.

On the extent of cut in lending rates, the SBI chief said "it is difficult to say at this point of time" but indicated that it would not be less than 25 basis points.

SITTING PRETTY: SBI Chairman O P Bhatt says that the bank has no liquidity issues at the moment.

SBI earlier reduced the benchmark PLR by 75 basis points to 12.25 per cent with effect from January 1.

Bhatt is in the capital to attend a meeting of state-owned bankers called by External Affairs Minister Pranab Mukherjee, who is also holds the finance portfolio.

On the interest rate outlook, Bhatt said, "There is a downward bias" in the short run and added liquidity at this point was not a matter of concern. "Liquidity at this point of time is comfortable (there is) no concern".

Commenting on the possibility of increase in non-performing assets of the bank, he said NPAs may go up both in proportion and absolute terms, with some small and medium enterprises and a few large corporates contributing to such assets.

"Maybe large and medium corporates could add to NPAs. We need to be vigilant about it . We can deal with it", Bhatt said.

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