No interest rate hike likely in 6 months: SBI

The country's largest lender, State Bank of India, has said that there will be no hike in lending rates in the next six months as there is surplus liquidity in the market.

Despite inflationary pressure, there will be no increase in the interest rate on loan in the next six months because of surplus liquidity in the market and rising deposits, SBI chairman O P Bhatt told reporters in Jamshedpur on Monday.

Bhatt said that there is a good amount of liquidity in the market and credit offtake is slowly picking up.

Referring to the ongoing merger process of SBI associate banks, Bhatt said SBI is a major stakeholder in SBI associate banks like State Bank of Saurashtra and State Bank of Indore.

"In fact, we did not have less than 75 per cent stake in any of these banks and owned 100 per cent in State Bank of Hyderabad and State Bank of Patiala which were with us for the last 50 to 60 years," he said.

State Bank of Saurashtra has already merged while process was on in regard to State Bank of Indore, Bhatt said.

The merger would improve SBI in terms of efficiency in operation, release of capital, economies of scale and avoiding waste and duplication. "More importantly, we are getting good quality people," he said.

However, the merger process, he said, should not be viewed in terms of benefit as it was a process of restructuring within a family.

Image: O P Bhatt, chairman and chief executive of the State Bank of India. Photograph: Vivek Prakash/Reuters