Country's largest bank SBI on Tuesday ruled out increasing its lending rates following the Reserve Bank's move to hike short-term borrowing costs as part of a slew of steps to support the falling rupee. "Neither the management nor the board of SBI that met on Tuesday in Mumbai felt that this requires any adjustment in lending rates...No change in the interest rate is under consideration by SBI," State Bank of India (SBI) said in a statement on Tuesday evening.
The statement said the RBI's surprise measures of last evening are "designed to curb speculation in the forex market and are not seen by SBI as indicative of any systemic problem or deeper malaise." The position in the forex market will stabilise shortly, the state-run lender said. To increase the investor interest in the domestic debt market and help the struggling rupee, the RBI hiked the marginal standing facility (MSF) by 2 per cent to 10.25 per cent last night, curtailed banks' overnight borrowings to Rs 75,000 crore and also announced a Rs 12,000 crore Government bond buyback.
These measures are expected to increase rates in the market, which many fear may lead banks to hike their lending rates. A senior SBI official said these steps will not impact the bank as much as others, because of the excess liquidity of up to Rs 20,000 crore that it carries can be deployed for lending activities without borrowing at extra costs. Banks' treasury operations will be hurt if the steps continue till September through mark-to-market losses because of the hardening bond yields, he added.
Comments
0 comment