SBI cuts base rate by 15 bps, hikes minimum balance requirements

State Bank of India (SBI) has announced a 15-basis point reduction in its base rate to 9.10 per cent from 9.25 per cent, with effect from 1 April and also extended the benefit of customers who have raised loans prior to 1 April 2016 as well.

SBI, the country's largest lender, however, kept the marginal cost-based lending rate (MCLR) unchanged, at 7.95 per cent for six months and 8.15 per cent for three years.

While the rate cut move will help reduce the equated monthly instalment (EMI) of existing borrowers, especially in the retail loan segment, SBI still faces the big challenge of asset quality with growing non-performing assets.

SBI chairman Arundhati Bhattacharya, however, downplayed this, saying that the bank has voluntarily undertaken an asset quality review in respect of all the common accounts (with the associate banks). In this regard, she said the State Bank group created more than Rs8,600 crore of additional provisions for these accounts.

With the merger of five associate banks and the Bharatiya Mahila Bank with itself, SBI is now a much bigger brand with 500 million customers, total business worth R44,77,000 crore and Rs43,55,000 crore savings bank accounts.

''All common accounts have the same asset classification. All stressed assets, to the extent possible where we had common exposures, are aligned,'' she said.

''We believe that even though the numbers will look bigger - obviously, because the balance sheet itself is bigger - we have a much better ability to resolve this going forward,'' said Bhattacharya.

Bhattacharya emphasised that the bank would not lose sight of its customers. ''Today, with the power of technology, we can address the customer by name for every transaction you do, and give you what you really require because we start understanding what you are doing on the basis of analytics.''

She said customers would get a more personalised look-and-feel of SBI over the next year.

''By July 2018, you will have a totally customised look and feel of every channel that you operate in - not only on your own internet banking channel but also at the branch. So, we are really working towards ensuring that we are able to personalise everything that we do for you - give you the kind of seamless experience that people really want.

''And for this, it was very important that we get the entire group together because it is very difficult to keep in step if you are six instead of one. So, to that extent also the merger is very timely,'' she added.