State Bank of India is counting on renewal interest rates from corporates for credit offtake as increasing bonds is making the market borrowing more expensive.
With the interest rate cycle turning around, bond yields have hardened in the last few months, trying to push the overall borrowing cost of companies in the debt market.
SBI’s lending rates to private companies have not changed since these marginal cost of funding based lending rate (MCLR), has an internal benchmark with slower transmission.
“Capacity utilisation in the economy is at about 75 per cent and we have got a situation where we expect more corporates to be looking at us for availing credit facilities as compared to options available in the past for raising funds from the securities market,” SBI chairman Dinesh Khara told reporters on Saturday.
The yield on the sovereign bonds has climbed 10 bps, whereas the MCLR of banks rose 30 bps between May and July, according to RBI data.
Dinesh Khara also said, “ a large portion of loans sanctioned to corporates is yet to be utilised. On the working capital front, it is as high as 49 per cent, and 26 per cent of term loans have not been used, taking the quantum of such loans to ₹5 trillion.”