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Santanu Sanyal

Mr Janki Ballabh, Chairman, State Bank of India, with Mr S. Govindarajan, Managing Director, at a press conference in Kolkata on Thursday.

KOLKATA, June 20

THE State Bank of India Chairman, Mr Janki Ballabh, has ruled out a firming of interest rates, at least in the near future, despite the pick-up in credit demand.

"There is surplus liquidity in the system'', Mr Ballabh told Business Line.

"Also, most banks are holding SLR bonds far in excess of the stipulated requirement and so there should be no problem in credit deployment in the event of a jump in credit demand'', he added.

Commodity prices were rising; also, the manufacturing sectors such as cement, paper, chemicals and pharmaceuticals and steel, so far languishing, are showing signs of improvement.

"In the first two months of the current financial year, the growth in credit demand has been positive against negative growth during the same period of the last financial year'', he said. The SBI Chairman, however, made it clear that SBI would go slow over advancing loans to big corporates.

This was because, as he explained, the spreads were going down on big corporate loans which were often advanced at sub-PLRs (prime lending rates).

Instead, the bank would focus its attention on retail loans, housing loans and loans to agriculture and small-scale industries as lending to these sectors was possible at more than PLRs.

Also, mid-corporates and trading sectors would be given a much greater attention than before.

He estimated the bank's credit growth in the current financial year at 16 per cent to reach the level of Rs 20,000 crore against a little more than eight per cent at Rs 9,000 crore in 2001-02 and indicated that about Rs 7,000 crore of total additional loans proposed to be advanced in 2002-03 would go to the retail segment, another Rs 4500 crore each by way of housing loans and loans to agriculture and SSI sectors and around Rs 2500 crore or so to the other sectors.

The reduction in NPAs (non-performing assets) too was high on the bank's agenda in the current fiscal, such that the ratio of gross NPAs to total advances was down to less than 10 per cent from 11.95 per cent as on March 31, 2002 and the ratio of net NPAs to net advances to less than five per cent from more than six per cent during the same period.

Unlike most other banks, SBI did not book large profits through trading in securities - a meagre increase of Rs 10 crore at Rs 352 crore. The sale of the bank's stake in the European Bank contributed to Rs 12 crore of profit. "We refrained from booking profits from trading operations in the interest of achieving sustained yield from our portfolios instead of one-time gain'', he observed.

In reply to a question, he said, the bank would upgrade its representative office in Sydney into a full-fledged branch during the current year and in Shanghai in the next financial year. There was a proposal to open a branch in Russia in partnership with Canara Bank.

New MDs

Mr Janki Ballabh told Business Line that Mr A.K. Batra, now Deputy Managing Director in charge of international banking, is set to take over as one of the Managing Directors of the bank after the retirement of Mr Y.P. Radhakrishnan, currently MD in charge of corporate banking. Mr Radhakrishnan is due to retire on June 30.

Mr P.N. Venkatachalam, currently Deputy Managing Director in charge of credit operations, would take over as the other Managing Director in August as the term of Mr S. Govindarajan, currently Managing Director in charge of national banking, is due to expire on July 30.

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