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SBI Decides Not to Extend Loans to New Realty Projects
India’s largest lender State Bank of India (SBI) has said it will not extend loans to any new realty project even though it counts many property developers among its clients. “It is a no to new real estate projects,” chairman O.P. Bhatt said. “We have our existing customers and if they need additional help or restructuring, we will help.” “Having said that, we are not saying that we will not lend to real estate sector. The fact also is that not many proposals are coming these days,” he added. Bhatt said SBI expects earnings to grow at 25% in the fiscal year to March 2010 and plans to maintain its net interest margins in the range of 3%.
The public-sector bank could also lower deposit and lending rates by 25 basis points in the next six months. One basis point is a hundredth of a percentage point. The bank is also looking to cut its prime lending rate (PLR), though this might not apply to retail customers. PLR is the rate at which banks lend to their top-rated clients. The top executive also said the process of selling stake in UTI Mutual Fund was in its final lap. “Talks with an international player for the stake sale is on and is likely to be at the earliest,” he said.
SBI said it requires Rs60,000-70,000 crore in the next five years to fund growth and plans to raise Rs20,000 crore by the end of the year.It is targeting an aggressive 25% loan growth in the current fiscal year because its non-performing assets have declined in 2008-09 compared with the preceding financial year, Bhat said.
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