SBI says no rate hike till April 20

State Bank of India (SBI), the country's largest lender, is unlikely to raise its benchmark lending rates till the annual monetary policy to be announced on April 20, despite the Reserve Bank of India (RBI) raising its key policy rates by 0.25 per cent on Friday. "We are not planning to raise lending rates till the credit policy next month. We are awash with liquidity," said O. P. Bhatt, chairman of SBI on the sidelines of an event marking the inauguration of the bank's 1,000th branch and 10,000th Automated Teller Machine (ATM) set up during the current fiscal. With this inauguration, SBI's branch network stands at 12,448 and 21,405 ATMs. Responding to another query, Bhatt added, "There may be another hike in policy rates in the policy announcement next month. The interest rate situation is dynamic and we are watching it." RBI hiked the repo (at which it lends to banks) and the reverse repo rates (at which it pays for bank deposits with it) by 0.25 per cent each to five per cent and 3.5 per cent respectively, n Friday, for the first time in nearly 18 months. Since October 2008, RBI had slashed these rates by 4.25 per cent and 2.75 per cent to 4.75 per cent and 3.25 per cent, respectively, in a bid to prop up the sagging economy, in the post-Lehman Brothers global financial crisis scenario. However, Bhatt was not so categorical on the extension of the bank's low- rate home and auto loan schemes, which offer floating rate loans at fixed rates of 8- 8.5 per cent for the initial three years. He said, " We will take a decision before the expiry of the schemes (by the month-end)." If the scheme is allowed to lapse by the month-end, home and auto loans would be available at a minimum rate of nine per cent, given the prevailing State Bank Advance Rate (SBAR, benchmark prime lending rate) of 11.75 per cent (2.75 per cent below SBAR). In such a scenario, new home loans would turn costlier - borrowers would have to pay Rs 65 more for equated monthly instalments (EMIs) of a loan of Rs 1 lakh for 20 years.

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