The Hindu Business Line : `SBI corporate loans now priced above prime lending rates'

DR Y.V. REDDY, Governor, RBI, and Mr O.P. Bhatt, Chairman, State Bank of India, at the inaugural session of the `International conference on emerging challenges to the Indian financial system' in Mumbai on Friday. — Shashi Ashiwal

Mumbai April 27 State Bank of India now prices its corporate loans above the prime lending rates.

Over the last five years, SBI and other banks had been offering loans at sub-PLR rates and cutting into each other. That era comes to a close.

Mr T.S. Bhattacharya, Managing Director, SBI, said: "Earlier, 90 per cent of the corporate loans were sanctioned at sub-PLR rates. Now, there are very few loans in our fresh exposure which are at sub-PLR". Mr Bhattacharya was speaking to reporters on the sidelines of the "International conference on emerging challenges to the Indian financial system".

Mr Bhattacharya said the bank's current advances stood at Rs 35,000 crore to large corporates, Rs 87,000 crore to the mid-corporate segment and Rs 20,000 crore to small and medium enterprises. The bank's retail advances stood at Rs 70,000 crore.

He said the price of a seve-year, corporate term loan has shot up from 9 per cent at the beginning of fiscal 2006-07 to 11.5-12.5 per cent now. Mr Bhattacharya said the bank board had earlier approved a 25 per cent limit (of total liabilities) to infrastructure, which will soon be touched.

The bank will have to look at alternative ways of financing infrastructure, like take out financing. SBI has funded overseas mergers and acquisitions worth $1.3 billion in the last fiscal. The bank was the largest financier of Aban Lloyd and placed $200 million to fund the Tata-Corus deal. "Market reports indicate SBI has overtaken ICICI in terms of funding overseas acquisitions," he added.

External sector robust

Earlier inaugurating the conference, the RBI Governor, Dr Y.V. Reddy said that India's external sector looks robust. India's external debt now stands at $142 billion as against this, the country has forex reserves of over $200 billion. India holds the fifth largest stock of reserves among the emerging market economies.

Referring to the banking system, he said all the scheduled commercial banks in the country now have capital adequacy rate of more than 9 per cent.

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