How will RBI's repo rate hike decision impact loan and repayments? SBI MD Ashwini Tiwari's exclusive chat with Anil Singhvi

In an exclusive chat with Zee Business Managing Editor, State Bank of India (SBI) Managing Director Ashwini Tiwari said that the Reserve Bank of India’s (RBI) decision, wherein it hiked the repo rate by 50 basis points, is largely along the expected lines. He said that the decision is aimed at curbing the skyrocketing inflation graph which has remained beyond the central bank's tolerance level.

“No impact of the hike is so far visible on loan growth and disbursements, neither on the repayment of the loan,” he said.

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Today's hike is a third consecutive increase in the key lending rate by the RBI since May when the central bank had increased the interest rate in an off-cycle policy meet.

"The translation of EMIs in retail loans is built up over a period of time and we have witnessed three hikes since May and only two months have passed so far," the Managing Director said while confirming that there would be "no impact on loans and growth-related as is seen at present".

Tiwari said that the transmission of rate hikes takes time, with respect to deposits as rates increase in a lag, while loan rates are rising by external benchmarks in the system.

Stating that the Indian economy is strong and resilient, the SBI MD stated, “We haven’t seen the impact of the rate hike on growth neither on wholesale nor retail - rather growth is on upwards trajectory.”  

With respect to Bond yields, Tiwari affirmed that the rate hike has impacted the SBI’s bond portfolio, which is quite big and available to sale category that falls under mark-to-market is also huge.  

The 10-year bond yield is down from June 30, 2022, levels and we have improved our position, the SBI MD said, adding that the rate hike hit was already done during the June quarter of this fiscal.