Lending interest rates will remain high: SBI

Country’s largest lender State Bank of India (SBI) has said that lending rates would continue to stay upward in the wake of spiraling inflation.

"Interest rates are likely to remain high because inflation is high ... till such time, inflation is high, Reserve Bank finds it difficult to lower the interest," SBI Chairman Pratip Chaudhuri told reporters here yesterday.

Describing pre-payment penalty as anti-customer step, SBI Chairman said that the bank had already waived such penalty on floating loans two months back.

"We think it (pre payment penalty) is an anti-customer step. We do not want to treat our customers as hostages and charge ransom from them (to allow them to move to other bank where they get cheaper loan)," he said.

The SBI Chairman exuded confidence that the bank would achieve good rate of growth in deposits and advances in current fiscal on the back of country’s expected 8% growth in GDP.

"Bank should be doing well because country is growing at 8%. We think our deposits and loan growth should grow by 20% in current fiscal," he said.

Amid rising lending rates regime, SBI has also decided to launch a new car loan product whereby it would charge Rs1,700 as EMI on Rs 1 lakh loan with interest rate of 11.5% per annum.

"We are coming out with an attractive product for car loan in which EMI will be Rs1,700 per lakh. If someone taken a loan of Rs3 lakh then he will pay close to Rs5,000 as installment," he said, adding, "interest will also be calculated on daily balance."

Asked about its Rs20,000 crore right issue to fund its expansion plans, Chaudhuri said, "it is very much there and it should happen next month or so."