Increase in interest rates could derail country's growth: SBI chairman

Public sector State Bank of India today said an increase in interest rates could have the danger of "derailing" the growth prospects of the country.
   
SBI chairman Pratip Chaudhuri told reporters here that inflation now, is like 8% plus and an increase in very high interest rate can have the danger of derailing the growth prospects (of the country) and it is balancing of the two. It is not easy, but Reserve Bank will be able to do something very optimum from both ends.
   
Asked whether the bank was in favour of the deregulation of savings bank deposits, he said, "In our view, we are not in favour of deregulation but adequate incentives for saving bank deposits. We will go along with Reserve Bank of India whatever it prescribes. In our view sent to the RBI, we have said deregulation may not be necessary."
   
Commenting on their plans to merger with its associate banks, he said the need to merge was well established as it would bring in more "synergies" and bring in "deduplication".
   
"We are still in the process of observing State Bank of Indore. Nothing more and nothing beyond this is happening. We are not under pressure or in any urgency for the merger to happen tomorrow or day after. The need to merge is well established as it will bring is the synergies and brings in deduplication," he said.
   
On the proposed rights issue, he said they were still holding dialogue with the Government. "We are talking to the Government because the total amount required as fund is quite substantial. The dialogue is going on. Since we need upwards of Rs10,000 crore, government needs to make sure what will be the source and what will be the modality," he said.
   
Chaudhuri also said they have set up a new vertical to reduce bad debts. "We have created a new vertical -- the Stress Asset Management Group. We are using more technology. We are also deploying more resources for recovery of bad debt and also trying to improve the quality of the origination of our loans", he said.
   
He said the biggest challenge for the bank was to take it forward and particularly with regard to the financial inclusion plan and supporting the agricultural sector of the country.
   
Chaudhuri was here to present a cheque of Rs18.50 lakh to The Leprosy Mission Trust India for reconstructive surgery under the Corporate Social Responsibility initiative. The move was taken in tandem with an awareness campaign on leprosy treatment in association with Rotary Interational District 3230 and Rotary Club of Guindy.