State Bank of India (SBI) today hinted at a hike in its interest rates next week following the RBI’s raising of the cash reserve ratio (CRR) and repo rate last Friday. “We are examining its (the RBI move’s) impact on our balance sheet. It is under examination..we will take a decision in a week or 10 days,” SBI managing director Yogesh Agarwal said here on Thursday. In January and February, when the RBI had hiked the CRR in tranches, finance minister P Chidambaram had asked public sector banks not to increase their home loan rates. Almost all the public sector banks had complied with this directive as their exposure to home and education loans did not form a sizeable percentage of their total exposure, unlike in case of ICICI Bank and HDFC Bank. Agarwal feels that interest rates have not peaked and expects the rising trend to continue for some more time until inflation is reined in. The present inflation is partly due to supply-side constraints and, hence, it might take some time for prices to stabilise, he said.On the monetary measures taken by the Reserve Bank of India, he said, “A slowdown in retail credit is beginning to be visible but perhaps not as expected.” As a combination of factors is responsible for the present inflation, it needs to be tackled from various fronts and the RBI has done well to take necessary measures on the monetary side, he said.
