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SBI has asked for Rs 4,000 crore, out of the Rs 14,000 crore earmarked by the government for capital infusion into banks. Kumar says there has been a secular upward movement in the cost of funds, cost of deposits over the last quarter, but it is not enough to affect the margins or the net interest income (NII) because the advances also have grown in the last quarter. SBI raised interest rates on deposits towards the end of September at the maximum 9 percent from 8.75 percent.
Below is the verbatim transcript of A Krishna Kumar's interview on CNBC-TV18
Q: A lot of confusion about this supposed cheap loans that are coming for consumer durables. First the question to you is are you likely to get capital quickly because the whole thing hinged on banks getting capital soon and therefore even more than what was originally envisaged that Rs 14,000 crore for all banks put together, have you been promised anything in terms of a timing for your capital?
A: I am not sure exactly about the timing but certainly something will come in very soon and based on that we are also looking at the contours of the plan, let us say a festival plan for offering loans for offtake of consumer durables. So looking at that and probably within a couple of days we will be ready with our offering in that regard.
Q: It will be only for consumer durables, it is not extended to home loans or anything like that?
A: Right now yes, that is what you are looking at, consumer durables and basically we have a very strong niche right now in the automobile financing sector. So we will push on that more than anything else.
Q: What might the cost come down by?
A: We are just looking at it, I cannot talk about it right now but we are looking at what we can do on that.
Q: Any idea how much of that Rs 14,000 crore might come to State Bank of India (SBI), any indication about the breakup?
A: No, I don't have an indication yet. As has been we have gone on record in the past, we asked about Rs 4,000 crore of that but let us see what happens. It depends on the government finally what they do.
Q: Capital is coming sooner, usually you are made to wait till March 31, if not even longer, this time you may get all of it earlier or some of it earlier?
A: I don't have a clue on the timing or on the amount but yes it will be definitely earlier than March 2014.
Q: Basically how is cost of money trending for you? Have you all had to woo investors and depositors with higher rates at all, how is the cost of borrowing?
A: In fact, we did raise our interest rates on deposits towards the end of September at the maximum 9 percent from 8.75 percent, which we were offering in the past. So yes, there has been definitely a secular upward movement in the cost of funds, cost of deposits for us over the last quarter but it is not being earth shattering in the sense it has not affected the margins or the net interest income (NII) because the advances also have grown in the last quarter as well.
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