The Hindu Business Line : SBI chief sees stable interest rate regime

MR A.K. Purwar, Chairman of State Bank of India, expects a stable interest rate regime to prevail in the country over the medium term despite a notable hardening of rates in international markets. The country's largest commercial banker simultaneously sees a growth in credit offtake in the months ahead, thanks to the increased possibility of lending to some major sectors.

"Interest rates will remain stable; they will certainly not go down in the near term. Inflation and liquidity are at a certain level and rate changes may not happen immediately," he said, adding that rates have been on the rise globally. He was briefing newspersons here after declaring SBI's results.

A higher credit offtake will pose as a key issue for the bank in the coming days, a trend that is likely to emerge because of positive developments in areas like steel and power. In steel, for instance, there has been large-scale restructuring and a section of steel companies has emerged stronger in recent times.

In power, too, there are signs that some companies are on their way to financial closure. These include about ten companies with a total capacity of 3,900 MW, ones that have a total debt component of Rs 9,700 crore. A few other infrastructure-related segments may also look up in the coming days. Advances in non-food segment are set to increase, the SBI chief mentioned. "We hope to clock a 16.5 per cent growth on this front in this fiscal," he said.

The bank, Mr Purwar told Business Line, hopes to become more active in terms of treasury operations this year. SBI, which managed to register significant gains last fiscal from treasury management, plans to seek opportunities in trading in various classes of securities, including equities, this year. It will also increase its exposure to derivatives.

As for its association with the group entities, SBI sees a bigger integration of their operations in the coming days. These banks already operate on a common technological platform and are expected to coordinate among themselves even more. However, no "legal merger" is on the cards.

The SBI chairman said the bank plans to look at strategic acquisitions in foreign markets very seriously this year. In particular, it proposes to strike deals in the African and Asian markets, and is, in fact, in the process of shortlisting a few candidates.

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