State Bank of India will reduce interest rates on vehicle loans and on loans to small and medium enterprises.
“We have already started adjustment of rates on the loan side. Auto loan rates will be cut today or tomorrow,” Mr A. Krishna Kumar, Managing Director, State Bank of India, told newspersons here on Saturday.
This will be followed by a reduction in the rates on smaller-ticket loans to small and medium enterprises, he added. On the likely impact of the interest-rate cut on bank profits this financial year, Mr Krishna Kumar said as about 47 per cent of deposits were under current accounts and savings accounts, net interest margins would not be impacted.
Following the repo rate cut of 50 basis points by the Reserve Bank of India on April 17, some banks, including ICICI Bank, Bank of Baroda, Punjab National Bank and Bank of Maharashtra, had already reduced their deposit and lending rates.
For the year 2012-13, SBI is targeting 25 per cent and 22 per cent growth in deposits and advances respectively.
“As per rough estimates, the growth was not as high as expected during the last financial year, at 18 per cent and 15-16 per cent, mainly due to the general economic scenario,” he said.
As SBI had surplus liquidity, meeting credit targets for the current financial year would be a problem, he added.
During last year, the growth of the SME and farm sector portfolios was in the range of 18 per cent to 22 per cent, while mid corporate and retail segments showed ‘sluggish' growth.
Earlier, he inaugurated a small and medium city credit centre for speedy processing of loans to small and medium entrepreneurs.