On the day of the RBI monetary policy review meet SBI chief said banks are unlikely to increase lending rates in the near future despite recent liquidity tightening measures announced by cbank to contain rupee fall, as demand for loans have remained weak.
As liquid tightening measures were likely to be temporary, any change in lending rates would depend on the length of these measures, according to bankers.
"Loan demand is too weak. That is why there may not be enough demand. We are waiting because these steps are supposed to be temporary. So, unless they (RBI) linger on for very long, none of the banks are increasing their loan pricing," Chairman and Managing Director of State Bank of India, Pratip Chaudhuri told reporters on the customary post-policy conference here.
When asked how long can the banks hold on to the current lending rates, Chaudhuri said that two to three weeks would be the normal waiting period for SBI after which it would take a call.
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Recently, RBI has taken several measures like capping the borrowing limit under Liquid Adjustment Facility (LAF) corridor, sale of government bonds through open market operation (OMO), minimum daily cash reserve ratio (CRR) balance, among others, to squeeze rupee liquidity to stem fall in the domestic currency.
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However, these measures had pushed short-term money market rates along with government bond yields to higher levels, creating
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