India's largest public sector bank, State Bank of India, has announced that it could soon reduce interest rates on various loans, like it recently reduced rates on loans given to SMEs, retail loans like car and home loans. It added that a further cut in base rate seemed difficult since there is little scope for reducing the base rate.
SBI had recently slashed its base rate to 9.75 percent in order to transfer the benefit of the reduction of cash reserve ratio by Reserve Bank of India to borrowers. Talking on the matter, SBI Chairman Mr. Pratip Chaudhuri said that the bank could reduce lending rates by trimming spreads for selected loan products.
SBI chairman also said that by slashing its base rate it had triggered a series of rate cuts by a number of banks, an act which was in tune with the wishes of RBI. In addition to this, the bank had also cut interest rates on fixed deposits of select maturities.
Chaudhuri also said that although the credit growth is slow, the bank plans to achieve its credit growth aim of 18 to 20 percent owing to the reduction in the bank's base rate. It is reported that at present the bank has a credit growth of 14.5 percent, whereas the deposits growth is 16 percent. The bank is also hopeful of achieving about 20 to 25 percent growth in car and housing loans segment in this year.