 "Challa Sreenivasulu Setty, Challa Sreenivasulu")
Mumbai: SBI Chairman Challa Sreenivasulu Setty during the ‘Global Fintech Fest’, in Mumbai, Friday, Aug. 30, 2024. (Photo: PTI)
The Reserve Bank is unlikely to ease the benchmark policy rate during 2024 given the uncertainty over food inflation, State Bank of India (SBI) chairman C S Setty has said.
The US Federal Reserve’s first cut in interest rates in more than four years is expected soon, triggering central banks in other economies to follow suit.
“On the rate front, a lot of central banks are taking independent calls. While Fed rate cut would influence everyone, RBI would be mindful of the food inflation before taking a call on interest rate cut,” Setty, who took over the reins of the bank recently, told PTI in an interview.
“That is what our view is, and our view is also that the rate cut during the current calendar year may not happen, probably we may have to wait for Q4 (January-March 2025) unless there is a good improvement in terms of food inflation,” he said.
The Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das is scheduled to meet during October 7-9 and take a call on interest rate.
Retail inflation, which is being taken into consideration by the rate-setting panel MPC for its decision, rose marginally to 3.65 per cent in August, from 3.54 per cent in July.
While the overall inflation is below the RBI’s median target of 4 per cent, the rate of price rise in the food basket was 5.66 per cent in August.
The RBI kept the repo rate unchanged at 6.5 per cent in its August bi-monthly review amid risks from higher food inflation.
This was the ninth consecutive MPC meeting which decided to maintain the status quo on the rate front. The Reserve Bank has kept the benchmark repo rate unchanged since February 2023.
In the last meeting, four of six MPC members voted in favour of the status quo while two external members pitched for a rate cut.
Earlier this week, Reserve Bank Governor Das also said the decision on interest rate moderation will be based on long-term inflation trajectory and not on the basis of monthly data.
On monetisation of SBI’s stake in some of its subsidiaries, Setty said, there was no thinking in terms of divestment of stake of any of the subsidiaries presently.
“If these subsidiaries require (growth) capital, we will definitely examine,” he said.
At this point in time, he said, none of the large subsidiaries require capital from the parent to scale up their operations.
The bank in fiscal 2023-24 had infused an additional capital of Rs 489.67 crore in SBI General Insurance Company Ltd.
The company has also allotted ESOP to employees and consequently, the bank’s stake has decreased marginally from 69.95 per cent to 69.11 per cent.
First Published: Sep 18 2024 | 3:38 PM IST
