SBI says no liquidity squeeze so far on RBI moves

State Bank of India said on Thursday it is not impacted much by the recent liquidity tightening measures taken by the Reserve Bank to curb rupee volatility.

"As far as SBI is concerned, we have not seen anything adverse.

"The same liquidity condition which we had last week continues this week," SBI managing director and head of National Banking A Krishnakumar told reporters on the sidelines of an industry event in Mumbai.

On the day RBI announced a slew of measures to suck liquidity from the system to stem rupee volatility, a senior SBI official had told PTI that the bank was carrying an actual lendable surplus of Rs 20,000 crore (Rs 200 billion).

The central bank had on Monday announced many surprise measures to curb rupee volatility which fell to an all-time low of Rs 61.21 on July 8 against the US currency.

The Reserve Bank of India raised the short-term rates by 2 per cent to 10.25, putting a cap on borrowing from repo at Rs 75,000 crore (Rs 750 billion) and also announced sale of Rs 12,000-crore (Rs 120-billion) worth of government bonds to squeeze out liquidity from the system, with an aim of curbing speculative trades in rupee.

The RBI measures have led many to fear that there might be some uptick in the lending rates due to the hardening in the money market, though almost all the state-run banks ruled out any such possibility thinking the tightening would be short-term

in nature.

On the issue of lending rates, Krishnakumar said the bank is not contemplating any revision in its base rate of 9.70 per cent, which is among the lowest in the industry.

He added that even as overall economic conditions remain gloomy, the bank is experiencing good business on retail side -- both on deposit accretion and advances.

It has notched a deposit growth of 15-16 per cent this fiscal, over the same period last year, he said.

"The demand for retail products like home loans is still strong. I do see that on retail side, there is still growth in deposits and advances," he said.

The bank is mulling some changes in its home loan product, where it is the industry leader, but is not looking at launching any new products, he further said.

Krishnakumar, however, said the slowdown continues in the credit offtake on the corporate side.

After the slew of measures to curb gold imports and restrict the current account deficit, the bank is not pushing the gold coins sale, he said, clarifying that the bank has not stopped the sale of gold coins.