State Bank of India says no rate cuts in near future

Top public sector lender State Bank of India (SBI) on Tuesday ruled out any interest rate cut for its borrowers, even as the Reserve Bank of India (RBI) chided banks for not having passed the full benefits of the last three reduction in its policy rate.

SBI Chairperson Arundhati Bhattacharya said any rate cut by the bank would depend on a lot many factors including credit growth and she does not see any room for any cut in the near future. This came soon RBI kept its policy rates unchanged , with Governor Raghuram Rajan saying that the headline inflation is at elevated levels and banks are yet to pass on the full benefits of previous rate cuts.

RBI has cut the rates thrice so far in 2015 by 25 basis points each. Rajan, who has used strong words against banks for holding on to rates in the April and June, on Tuesday said banks have only cut 0.30 per cent at the median level as against the RBI s cut of 0.75 per cent this year.

Commenting on this, Bhattacharya defended SBI's position and said that the bank had raised the rates by 30 basis points only when RBI had hiked the policy rate by 75 basis points, and the reduction in the bank's rate has also been 30 basis points when the central bank has cut the policy rate by 75 basis points.

She, however, added that RBI's action has been on expected line and it was good that the central bank has retained a dovish stand.