SBI bats for lower lending rate, 2 % interest on current account deposits

The State Bank of India (SBI), the country's largest lender, has expressed the hope that the Reserve Bank of India (RBI) will announce a 0.5 percentage point reduction in interest rate and bring down the cash reserve ratio (CRR) by a minimum one percentage point.

"CRR cut is more important and repo rate cut, if it happens, will be very useful. Fifty basis points repo rate cut would be useful. CRR, I would request for a 50-100 basis points cut," SBI chairman Pratip Chaudhuri said while detailing his monetary policy wish list.

"Only then, the interest rate environment can come down significantly," he added.

RBI governor D Subbarao had, during the monetary policy review in December, had proposed to ease liquidity woes of banks at its January policy review.

Chaudhuri also hoped that the central bank would allow banks to pay interest rate on current account deposits at 2 per cent per annum so as to attract deposits that are at present lying idle with businesses.

"Reserve Bank should allow some interest...something like two per cent to be paid on current accounts... that will encourage more people to put (in banks) instead of keeping the money in cash. It will help put the money in current account," he said.