State Bank of India expects the Reserve Bank to cut interest rates by 25 basis points

Country's largest lender State Bank of India expects the Reserve Bank to cut interest rates by 25 basis points, a top bank official said.

SBI Managing Director A Krishna Kumar also said there is an increase in the number of corporates opting for corporate debt restructuring (CDR) programme.

On RBI policy, he said, "Possibly, I think RBI Governor has gone on record that there could be some softening of the policy measures in future. But what form of softening is to be seen. I expect about 25 basis points (interest rate cut)."

The apex bank has increased key policy rates 13 times since March, 2010. It, however, went for a pause in the monetary stance in its policy review last month as the inflation started cooling down.

Repo rate, at which the Reserve Bank of India (RBI) lends to the banks, stands at 8.5 per cent and Reverse repo rate, at which the RBI borrows from banks, is 7.5 per cent.

In the last review, the RBI also decided to retain the cash reserve ratio (CRR), the amount that banks need to park with the central bank, at 6 per cent.

Replying to query on the CDR packages, Kumar said there is an increase in the number of corporates opting for "corporate debt restructuring (CDR) programme as the economies are slowing down world over."

"We cannot quantify how many companies are coming but we have seen substantial increase in the number who wants to avail corporate debt restructuring programme," the banker said.

There are enquiries from large corporate houses as well as SMEs across the country, requesting restructuring or rehabilitation, he added.

While refusing to comment on the Air India CDR issue, he said the airlines are too big to come under CDR packages.

He further said the banks expects growth in credit offtake to be in the range of 17 to 18 per cent and Net Interest Margin to be in the range of 3.5 per cent."