State Bank of India (SBI) Chairman C.S. Shetty said on Wednesday that the bank is confident of achieving its three per cent net interest margin (NIM) target even in the event of a 0.25 per cent cut in the policy interest rate next week.
Speaking to PTI, Shetty said that the Reserve Bank will take a difficult decision on the policy repo rate next week, but the bank estimates that if there is a cut in the interest rate, it will be only a nominal cut of 0.25 percent, which will not have much impact on the margin.
He said the bank has several measures to maintain its NIM. This includes the full benefit of the one per cent cut in cash reserve ratio (CRR), revaluation of fixed deposits (FDs) previously held at higher rates and 0.2 per cent bank account rate cut.
He also said that only 30 percent of the bank’s assets are linked to the repo rate, hence the impact of the Reserve Bank’s rate cut will be limited. He said that in the September quarter, SBI had increased the NIM by 0.03 percent to 2.93 percent and on the basis of this, he is confident of the NIM being more than three percent by the end of the current financial year.
