Base rate to be 8% or less: Bhatt

The countrys largest lender State Bank of India (SBI) has hinted that the banks base rate would be around 8 per cent.

The countrys largest lender State Bank of India (SBI) has hinted that the banks base rate would be around 8 per cent. It is clear that the base rate would not be more than 8 per cent as far as the SBI is concerned, SBI chairman OP Bhatt told reporters on the sidelines of an event in Mumbai on Monday. The interest rates on some of the loans may go up,thanks to the base rates implementation on July 01, Bhatt said.

The Reserve Bank of India (RBI) has set July 1 as the date from which the base rate regime will come into effect. The RBI has sought to make banks stick to a declared lending rate through the base rate rule,below which no bank can lend,with a view to bringing about more transparency in the lending regime.

As far as lending is concerned,Bhatt does not expect that the lending would be affected by the base rate regime in banks especially in the SBI. We are adequately positioned to do business in the new regime, Bhatt said,adding,On the liquidity position of the bank,it is still borrowing from the market.

Bhatt maintained that his bank would take a call on revision of deposit rates only after the RBI credit review,which was slated for July 27. Banking sources said that some banks have decided to take a call on the base rate as soon as possible,even before July 27 this year. For instance,the countrys second largest lender Punjab National Bank has also decided to hold its board meeting on Tuesday in Mumbai where the base rate would be the centre of discussion. The same is the case with the Corporation Bank,which would likely decide about its base rate on Tuesday as well. Allahabad Bank CMD JP Dua said,Though our banks board has already discussed about the base rate earlier,the final call to be taken by the banks assets and liability committee (ALCO) now.

The chiefs of Bank of India (BoI) and Bank of Baroda (BoB) said they would be announcing their base rate during the last two days of the month. For BoB,the base rate would be somewhere between 8 and 8.5 per cent,whereas BoI is likely to fix it around 8.5 per cent, official sources said,adding,Oriental Bank of Commerces base rate would be between 7.75 per cent and 8.25 per cent.