Rate cut: SBI in wait-and-watch mode, says Bhattacharya

The Reserve Bank cut the repo rate by 25 basis points last month and in a bid to nudge banks to cut rates, the RBI cut SLR in its policy this week. But when will banks pass on rate cuts to consumers? SBI 's Arundhati Bhattacharya says she is in a wait-and-watch mode.

She says monetary policy is a bit of a blunt instrument mainly because cost of funds is not all that dependent on repo rates. Hence, transmission is not always symmetrical and therefore, can’t immediately reduce income, she adds.

“When will we do it? When one bank or the other decides you know that it's time to.. Not necessarily there are bigger banks also… Big banks and one of them will take a call that it's okay to take the competition head on and become a little more competitive and then the others will follow suit,” says Bhattacharya.

She says that the regulator is doing its bit. Now, whether it can do more, of course the banks would want many many things more, she says. "Yes, they are trying to reign in the bad loan problem. They are trying to ensure that we get to it as quickly as possible and of course from the government’s side also there is a lot of movement.

Going forward, she will be looking more at the quality of equity, the quality of the cash flow.

On February 06, 2015, State Bank of India closed at Rs 290.35, down Rs 0.45, or 0.15 percent. The 52-week high of the share was Rs 2977.85 and the 52-week low was Rs 286.15.

The company's trailing 12-month (TTM) EPS was at Rs 15.70 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 18.49. The latest book value of the company is Rs 158.43 per share. At current value, the price-to-book value of the company is 1.83.

State Bank of India