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SBI chief hints at further rate cuts

New Delhi, Dec. 4 (PTI): A month after the bank rate cut by the Reserve Bank and the reduction in lending rates by banks, State Bank of India today hinted at the possibility of further reduction in interest rates.

“Interest rates will continue to be stable with a little downward bias,” SBI chairman A. K. Purwar said at an international banking summit here.

The statement assumes importance in the wake of reduction in lending and deposit rates by most of the banks after the benchmark bank rate was reduced by 0.25 per cent to 6.25 per cent in the October busy season credit policy of the Reserve Bank. SBI had brought down prime lending rate by 0.25 per cent to 10.75 per cent, medium term lending rate to 11.25 per cent and short term rate to 10.25 per cent from November.

The bank also reduced its term deposit rates by 0.75 per to 7.0 per cent for 1-2 years deposits, 7.25 per cent for 2-3 years and 7.5 per cent for over three years. Housing loan rates have been reduced to about 9.5 per cent.

The RBI in the April credit policy had indicated a 0.50 per cent reduction in bank rate but had slashed the rate by only 0.25 per cent thus leaving room for a further reduction in the coming months if required.

IT drive

SBI will invest Rs 500-600 crore for interconnecting about 3,000 branches in the next two years, set up a disaster recovery management centre and even target to bridge the digital divide to take technology banking to rural India.

SBI chairman A. K. Purwar also said that the bank was planning to convert its branches into “financial super-markets” which would offer all types of financial products along with banking products.

“With the vision of looking beyond tomorrow, we would like to be tech-savvy within the 2-3 years. SBI will invest over $ 100 million (Rs 500-600 crore) for technology upgradation in the next 3-5 years,” Purwar said.

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