MUMBAI, OCT 1: The chairman of State Bank of India (SBI), M S Verma, has ruled out any further interest rate cut in the forthcoming monetary policy to be announced on October 21. The bank has scaled down the budgeted growth in advances in view of the sluggish credit offtake.``I think interest rates have levelled. They will neither move up nor down. If we push down lending rates further, it would be counter-productive for the entire banking system," Verma said here today.On the credit offtake in SBI, he said due to the slowdown in the economy, the bank has scaled down the budgeted growth in loan assets from 16 per cent to about 13-14 per cent.Growth in advances in the first two quarters of 1997-98 was `very controlled', he said, adding it would be extremely crucial in the next two quarters of the current fiscal. "Even if the Reserve Bank of India (RBI) cuts the bank rate in the monetary policy this month, not many banks can afford to bring down interest rates," he felt.He was of the opinion that there were no signals for a cut in the bank rate, which the RBI seeks to develop as a reference rate, in the monetary policy. The policy will, however, have elements that will give a fillip to credit pick-up. "We expect a good portion of our budget - about Rs 2,000 crore to Rs 3,000 crore - to be picked up by the infrastructure sector," Verma said. Verma felt that a turnaround in the sluggish industrial growth was round the corner, and said advances would grow to about Rs 7,500 crore in 1997-98.Elaborating on the risks involved in infrastructure projects, he said advances were of longer maturity and that the time taken for business in the sector to gather momentum was much higher. He also added that SBI was looking at securitisation of long-term advances at the end of five or six years of the loan assets.He said the newly-established Infrastructure Development Finance Corporation (IDFC) is also thinking of developing products to take over loans guaranteed by it after few years."SBI may itself also issue bonds with the loans to infrastructure projects being the security .thus my money will be free and I can recycle it," he said.He, however, stated that for availing the securitisation facility, certain changes in the prevailing legal system are to be carried out.SBI, which commands about a fourth of the market share in deposits and advances, has enough resources to meet the requirements till the end of 1997-98.Verma also launched code of conduct of fair banking practice for the customer service provided by its vast network of branches.
