"What the banks are waiting for is a little bit more of a sign of a credit pick-up. Whatever we say, when we cut the lending rates our income comes down and we need some other ways of making up that income to keep paying interest on deposits. That can always happen if the credit growth is quite robust and volume picks up.
"But when the volumes are very thin and if you are not seeing that kind of a clear pipeline, then it is very difficult to cut lending rates. So, I think most of us are waiting to see a little bit more of a pick-up in credit," Bhattacharya told reporters on the sidelines of the bank launching the country's first economic indicator, SBI Composite Index, here today.
The credit growth is slowly inching up and is definitely better than the growth up to September, she said. "Retail growth is alright. On the corporate side also we are seeing a little bit growth now, though new projects are still a challenge," she said.
If the deposit rates are very high, it is difficult for banks to lower lending rates, the SBI chairman added.
In the second quarter SBI slashed deposit rates thrice, followed by reductions in October and November. Last week someother lenders such as HDFC Bank, ICICI Bank and IDBI Bank
also reduced deposit rates.
"The fact that we are adjusting on the deposit taking side means that going forward all of us are seeing a rate cut. But exactly when it will happen is not something I can really tell you now," Bhattacharya said.
During the December 2 policy announcement, the Reserve Bank left key rates unchanged, while in the past 15 months it has increased rates by 75 bps to 8 per cent.

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