The Hindu Business Line : Liquidity situation is tight: SBI Chairman

New Delhi, Oct 4 State Bank of India (SBI), the country’s largest commercial bank, does not see the Reserve Bank of India (RBI) hiking policy rates in its mid-term monetary policy review slated for October 24.

“For the moment, the liquidity situation is definitely tight. There is no doubt about it. Inflation has come down at least a little bit. It is unlikely, it will go up very much higher. It may not go down very much. In this scenario, it is difficult for me to imagine that RBI will hike interest rates,” Mr O.P. Bhatt, Chairman, SBI, told reporters here on the sidelines of Banking Summit on North Eastern region here on Saturday.

Deposit rates

While stating that lending rates had peaked, Mr Bhatt said deposit rates at the moment were moving north. SBI had on October 1 introduced a new deposit product SBI 1000 at 10.5 per cent, which is one of the highest rates ever given in the recent past, Mr Bhatt pointed out.

On the quantum of exposure in troubled American financial institutions, Mr Bhatt said SBI’s London office had an exposure of $5 million in Lehman Brothers. “This has been fully provided for. It is negligible given our group balance sheet size of about $ 200 billion,” he said.

Meanwhile, Mr Bhatt said SBI would open 65 new branches in the North East this financial year as against 25 branches last year.

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