The Banking System Will Bounce Back End-February Or March: SBI Chief

The banking system will be back on its feet by end-February or March, State Bank of India (SBI) chief said on Monday.

Chairperson Arundhati Bhattacharya said normalcy will return with the credit growth, thanks to demonetisation, put to good use.

The chairperson said banks, indeed, have huge low-cost funds driven by deposits following the demonetisation drive. This, she felt, will flow out. "But we expect 40 per cent of that to stay with the bank," she added.

"At that time, we will have a relook at the deposit rates."

Her statement comes close on the heels of a 0.9 percentage point cut in lending rates.

Referring to the rate cut announced, Bhattacharya earlier said: "This is a liquidity-driven rate cut. The liquidity in the system in unprecedented, in terms of the fact that what we did in the first nine months of the year, we have done one-and-half times that in 30 days."

Though the excess liquidity was marked by a lower credit growth, she said, “we are open for business”.

“There is demand in the economy and there should not be any uncertainty on this."

With Inputs from IANS