Pressure growing on liquidity and interest rates: Purwar

Mumbai, Feb 24 (UNI) State Bank of India (SBI) Chairman A K Purwar today said there was upward pressure on interest rates and liquidity in the banking system was tight.

''We will wait for the budget and take a call, but there is a hardness in the interest rate market and liquidity pressure,'' Mr Purwar said in response to a question about any revision in interest rates.

Earlier in the week, the bank raised home loan rates by 25-75 basis points.

Cash supplies have dwindled in the past two months due to a USD 7.3 billion redemption of an expatriate deposit scheme, sluggish government spending and robust corporate demand for bank loans.

SBI was able to retain about 15 per cent of the total redemption within its various investment schemes.

Inter-bank overnight rates were dealt at about seven per cent, unchanged from the previous day's level, and above the 5.5 per cent range where they traded when funds with banks were ample, forcing banks to raise lending and deposit rates.

UNI GC GK SKB1915