State Bank of India (SBI), the country's largest bank by assets, may lower its lending rates on consumer loans later in the month.
"I am not ruling it out. It could happen in the next two or three weeks," said Pratip Chaudhuri, the bank's chairman, in Gurgaon, Haryana, on Wednesday.
Chaudhuri was addressing journalists on the sidelines of a World Economic Forum event.
As the market leader, State Bank's moves on interest rates, typically, set the benchmark for other banks.
According to Chaudhuri, the trigger for any rate cut would be the bank's need to find a way to deploy its surplus liquidity. SBI's books currently have excess liquidity of about Rs 60,000 crore to Rs 70,000 crore, he added.
On October 30, the Reserve Bank of India (RBI), in its quarterly monetary policy, did its bit to partially loosen monetary policy by releasing Rs 17,500 crore into the banking system through a reduction in the cash reserve ratio (CRR).
CRR refers to the mandatory quantum of reserves banks have to maintain with the central bank.
However, Chaudhuri made it clear that SBI was flush with liquidity, and that this had nothing to do with the RBI's CRR cut. "Deposit flow is so robust (that) today our biggest challenge is to deploy deposits," he explained.
Apart from interest rates, Chaudhuri was quizzed about SBI's exposure to the troubled Kingfisher Airlines. But he declined to reveal any numbers, saying the bank was scheduled to announce its July-September quarter results on Friday.
However, Chaudhuri did say that, in his reckoning, Kingfisher Airlines needed an equity infusion of about $1 billion. "We are slightly disappointed with the pace at which their capital raising programme is going on. Unfortunately, till date, we have not seen anything significant," he said.