A cut in interest rate is not the be-all-and-end-all for priming growth in the economy, said State Bank of India Chairman Arundhati Bhattacharya.
Speaking to the media in the backdrop of the bank making a steep cut in its one-year marginal cost of funds-based lending rate to 8 per cent from 8.90 per cent, the SBI chief said: “Interest rate is one of the components; it can never be the only component for boosting growth. So, we have to bring back confidence in the economy in very many ways. And, I think, the kind of measures that were announced (by the Prime Minister) on that day (December 31) is basically trying to bring the benefits of growth to every segment of the country, rather than leaving it in pockets.”
So, whether it be affordable housing, or small entrepreneurs (where the credit guarantee limit has been doubled to ₹2 crore), these measures are meant for the small borrowers, and since much of the bank’s loan book is with the small borrowers, it will definitely help it, she added. “So also the announcement that 60 days of interest for farmers will be credited upfront. It will obviously help the farmers. So, we are very keen on seeing that these sort of things happen. In the end, it creates a better and more sustainable portfolio for us,” said Bhattacharya. Referring to the slew of home loan products, including a bridge loan, top-up loan and loan for the non-salaried segment, launched by SBI, Bhattacharya emphasised that it is meant to be a clear signal that her bank is open for business, that there is demand in the economy.
She said: “There should not be any uncertainty on this. And definitely, we would like to see credit growth getting jump-started….Today, it is extremely important to bring back confidence in the economy, jump-start credit growth. I think, it is important for us to try and have as stable a rate regime as we can possibly manage.”