SBI says RBI cuts a signal for lower rates

MUMBAI (Reuters) - Interest rate cuts by the Reserve Bank of India (RBI) on Tuesday are a signal for commercial banks to lower their rates, the chairman of the country's largest bank said.

"The credit policy is a very clear-cut signal that interest rates should ease off," O.P. Bhatt at State Bank of India told reporters, adding his bank would take a call after a meeting of the bank's asset-liability committee.

The RBI cut its short-term lending and borrowing rates by 25 basis points each to shore up faltering growth as the global financial crisis hit the domestic economy much more than expected.

"We do not know how much the NPAs (non-performing assets) will be," Bhatt said, when asked about possible rise in bad assets owing to the economic slowdown.

He said the bank's credit and deposit growths were expected at 25 percent each in 2009/10.

"Economic data indicates things are getting better. We had been growing higher than the industry and this year we expect it to be slightly higher," he said.

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