Lending rates not to move up till May-June: SBI chief

MUMBAI: State Bank Chairman O P Bhatt on Saturday said that lending rates in the banking system are unlikely to rise at least in the next 3-4 months as hiking rates in a low-demand scenario could hurt banks' margins.

"That (increasing lending rates) may not happen till May-June till the liquidity surplus goes away from the system," O P Bhatt told reporters on the sidelines of an event here.

Bhatt hinted that the State Bank is also unlikely to increase the interest rates for its depositors in the near future.

After the RBI hiked the portion of deposits banks need to park with it for zero interest last month, at least two banks--HDFC Bank and IDBI Bank--had upped their deposit rates-- a trend that could be followed by other banks in the coming days.

SBI has a liquidity surplus of around Rs 75,000-crore and its maintenance cost had adversely impacted the third quarter numbers the bank.

On base rates, Bhatt said banks have sent a "collective feed back" to RBI, where they have cited some implementation issues, particularly in the priority sector and staff loan segments. link.....