SBI rules out lending rate cut for now

Even as RBI Governor has said that banks have scope for further reducing their lending rates, country's largest lender State Bank of India today ruled out of any lending rates cuts at this point.

Earlier this week, Governor Urjit Patel said there was scope for banks to reduce their lending rates as RBI has cut repo rate by 175 basis points since January 2015.

"The Governor talked about it (lending rate cut), but I do not know which bank he talked about. If you see from the beginning of the rate cut cycle, we were at 10 per cent at that time and today we are at 8 per cent. Our MCLR cut has been a 200 basis points.

"RBI, since the beginning of the cycle, has cut only 175 basis points. So, we are ahead of RBI in the cuts and therefore at this point of time it (lending rate cuts) seems unlikely," SBI Chairman Arundhati Bhattacharya told reporters here today.

She said whatever cuts had to be made have already been done and there are no further rate cut plans at this point. Last month, SBI had reduced marginal cost of funds based lending rate (MCLR) sharply by 0.9 per cent from 8.90 per cent to 8 per cent for 1-year tenure.

After announcing the sixth monetary policy on Wednesday, RBI Governor said there was scope for more rate cuts by banks, pointing out that the weighted average lending rate has come down only by 0.85-90 per cent as against a 1.75 per cent cut in policy rates since January 2015 .

"There is still scope for the lending rates to come down further because our policy rates came down by 175 basis points and weighted average lending rates have come down only by 85-90 basis points. I think there is scope for more transmission," Patel had said.

RBI started reducing repo rate since January 15, 2015 when the rate was brought down to 7.75 per cent from and since then it has cumulatively reduced the rates by 175 bps. Bhattacharya further said the bank will keep monitoring the rate situation and take necessary steps if warranted.