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Money > Business Headlines > Report April 2, 2002 | 1425 IST |
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SBI chief hints more rate cuts unlikelyBS Banking Bureau State Bank of India Chairman Janki Ballabh on Monday said that there are "limitations" in reducing the cost of funds further. By saying so he hinted that it might not be possible for banks to cut their prime lending rates further. The SBI had, on March 27, pared its PLR by 50 basis points to 11 per cent from 11.5 per cent. He was speaking at the Banking Summit conducted by the Confederation of Indian Industry in Mumbai. "The rates have declined by more than 4 per cent over the last four-five years. Corporates want the rates to go down further. In fact, they expect loans to be linked to government paper yields and not PLR! By global standards, our rates are still high. However, there are limitations in reducing the costs further," Ballabh said. According to him, banks cannot bring down the cost of overheads further. However, transaction costs can be reduced by the use of technology. "Without technology, transaction costs cannot be brought down. We must redeploy manpower in marketing to increase the volume of business. Part of the gains will go to the customers and a part to the profit and loss account," Ballabh said. The SBI chairman said consolidation is critical for private sector banks as well as public sector banks. "We must see strategic repositioning of public sector banks," he said. He also called for structural adjustments to bring down the level of non-performing assets. "The NPAs have come down in percentage terms but the quantum increases. How do we reduce the inflow of new NPAs? We must focus on risk management and technology will be the key driver of change," he said. ALSO READ:
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