SBI hints at rate cut

State Bank of India, the country's largest bank, has hinted at cutting lending rates.

"We had an ALCO (Asset-Liability Committee) meeting recently and there we did not cut the rates, but I'm not ruling that out. It could happen in the next two to three weeks," SBI chairman Pratip Chaudhuri said on the sidelines of World Economic Forum in Gurgaon on Wednesday.

"We are seeing a very strong co-relation as you drop the rates, the loan demand picks up very strongly," he said. Chaudhuri said SBI has sufficient surplus liquidity riding on the back of robust deposit flow into the bank. He added that the government plans to infuse about R4,000 crore of capital in SBI by the end of this fiscal. "In fact, we would not be surprised if in this year our home loan grows by 30%. With this kind of robust growth coming in, I have already said that we are very surplus in liquidity of about R60,000-70,000 crore, so a rate cut could be a possibility as well," he said.

Regarding Suzlon Energy going to the credit debt restructuring (CDR) cell, Chaudhuri said it is a good decision and there was no concern regarding solvency of the company. SBI is the largest lender to Suzlon Energy's R13,700 crore debt, which has been referred to the CDR cell. With a loan exposure of around R3,610 crore, SBI is the lead bank in the consortium of eight CDR lenders and three non-CDR lenders.

"It's (Suzlon) a running company. It has operations globally. They took lot of short-term debt (3-5 years) and there business model is such, that after they build a wind energy farm, their revenues come after 15-20 years. So I would say it is more of a mismatch rather than a solvency issue," he said.

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