Reserve Bank's recent policy stance has earned for it praise as well as brickbats.
SBI Chairman Pratip Chaudhuri on Tuesday once again expressed his open disagreement with the RBI on cash reserve ratio (CRR) saying it is a "waste" for the economy and successive interest rate cuts by central bank have failed to contain inflation.
Within hours of RBI slashing the Cash Reserve Ratio (CRR) by 0.25 per cent, State Bank (SBI) on Tuesday hinted at a likely reduction in lending rates soon.
SBI held its asset liability committee meeting on Thursday evening to finalise its rate hike move.
State Bank of India Chairman Pratip Chaudhuri again made a strong pitch for a reduction in banks' Cash Reserve Ratio (CRR) at the Reserve Bank's mid-quarter review of monetary policy scheduled September 7.
Reserve Bank of India Governor D Subbarao surely knows how to crack a joke even on as mundane a topic as the cash reserve ratio (CRR).
The transmission of the last cash reserve ratio cut has also not happened fully because that came in March.
Last month, RBI slashed cash reserve ratio -- the percentage of deposits that banks have to keep with the RBI -- from 5.5 per cent to 4.75 per cent. With this, the central bank had infused Rs 48,000 crore (Rs 480 billion) into the economy.
MTN is a kind of bond note with a maturity period usually between 5 to 10 years continually offered through various brokers, rather than issued all at once like other bonds.
The deposit rates are up by one percentage points.
Insiders say some issues that demand immediate attention include improving asset quality and conservation of capital.
Sharp increase is a major departure from those during former chairman O P Bhatt's regime.
"For a bank like ours, it (hike in interest rate on savings deposits) does (augurs well)... (People are) keeping Rs 9.5 lakh crore at home in cash because of the low interest rate (on savings deposits). They are not comfortable in committing money in long-term deposit," SBI Chairman Pratip Chaudhuri told reporters after the post-policy meet with the RBI Governor.
The bank is in dialogue with the government and the proposed rights issue should happen this year, SBI chairman Pratip Chaudhuri said in New Delhi.
SBI last reduced its lending rate in January by cutting it by 0.05 per cent.
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SBI Chairman in the last year's banking conclave had started a debate by seeking to abolish cash reserve ratio to enhance liquidity in the banking sector for more productive use.
As liquid tightening measures were likely to be temporary, any change in lending rates would depend on the length of these measures, according to bankers.
Nothing has ever been done to make bank officers accountable, except for the rare actions when there is a public controversy, argues Debashis Basu.
The next chairman at the country's largest lender could enjoy a four-year tenure.
Pratip Chaudhuri said such bonds might expose issuing entities (banks) to class action suits in the US for making an offer to a specific ethnic group in that country.
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The rupee had earlier this month touched a life time low of 61.21 to a dollar.
Claims to have the lowest base rate in the market.
Soon after unveiling of the Reserve Bank's mid-quarter policy review, country's largest lender State Bank of India on Friday said lending and deposit rates will go up in view of the festive season demand.
He stressed on the need to give more attention to the industrial sector.
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KC Chakrabarty who was appointed as RBI deputy governor in 2009, is considered frank with his views.
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Currently, the cash reserve ratio is pegged at a low of 4 per cent, while statutory liquidity ratio that includes securities such as government bonds, stands at 23 per cent, down from 25 per cent in 2010.
SBI was slow in filing and following up on winding-up cases.
The 57-year-old Bhattacharya, front-runner for the post on account of years of service left, was managing director and chief financial officer of the bank prior to her elevation.
Amidst bankers and industry crying foul over RBI's move to squeeze liquidity, Reserve Bank Governor D Subbarao on Friday met Finance Minister P Chidambaram ahead of first quarter policy review next week.
Arundhati Bhattacharya is a strong contender for chairperson post, after Pratip Chaudhuri retires in September.
Top bankers have hailed the contributions of the outgoing Reserve Bank Governor Duvuuri Subbarao saying he did his best during a tenure that was marked by difficult times for the economy.
The bank had posted a 14.9 per cent rise in deposits in FY13, with the last two quarters witnessing headwinds, partly due to the bank's decision to test the market by lowering its offering.
After Chakrabarty's exit there will be two vacancies for deputy governors in the central bank.
Head of state-run Indian Bank T M Bhasin had called for a CRR cut.
The RBI's reluctance to cut rates should be seen as a case of inability in the face of inflation.
In its quarterly monetary policy review, RBI had last month retained the CRR at 4.75 per cent and reduced the statutory liquidity ratio -- the amount of deposits banks park in government bonds -- by 1 per cent to 23 per cent, effective August 11.
B Sriram, the senior-most managing director at SBI, along with fellow MDs Rajnish Kumar, P K Gupta, and Dinesh Kumar Khara had been interviewed for the post
SBI is the first major state-run bank to hike lending rates after short-term rates rose as a result of the Reserve Bank of India's liquidity tightening moves announced in July.
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The minister, who will also be meeting foreign institutional investors whose money is key to funding CAD in the afternoon, did not speak to reporters waiting outside.
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