SBI to keep base rate around 8 per cent

State Bank of India, country's largest lender will be announcing its base rate by June 15- the new benchmark at which banks lend to clients-- and the rate will be calculated based on SBI's cost of deposits.

SBI Chairman O P Bhatt said in Mumbai, "For State Bank alone, we are looking at the cost of deposits and not the cost of funds (for the calculation of base rate). The tenure (of deposits) we have not decided."

Although Bhatt did not tell what would be SBI base rate but it can be around 8 per cent. Bhatt said, "Right now, we have such a wide variety of options we need to make sure that our customers do not suffer nor should the bank."

The meeting of chiefs of leading state-owned lenders was held under the guidance of SBI to discuss various operational challenges while switching to the new benchmark system as directed by the Reserve Bank of India in order to enhance the transparency in lending.

As per RBI guidelines from July 1 all banks have to switch to base rate system from the existing benchmark prime lending (BPLR) but they have been given free hand till December 31 to choose the parameter using which the benchmark rate will be computed.

The chiefs who attended the meeting under SBI guidance to discuss the base rate implementation included Union Bank Chairman and Managing Director, M V Nair, Bank of Baroda CMD M D Mallya, Bank of India CMD Alok Misra, Central Bank of India Executive Director Ramnath Pradeep amongst others.