State Bank of India (SBI) chairperson Arundhati Bhattacharya today said that one cannot reduce deposit rate and lending rate at the same time.

Replying to a question on when lending rates will start coming down in view of SBI reducing bulk deposit rates, Bhattacharya told reporters here that there is a timetable by which banks operate. “So we have to see what the cost of deposits is on the 24th of each month and thereafter the cost of lending will be determined on the 1st of the next month.

That is the timetable we have to give ahead of time and this is what we are doing,” she said. “So you cannot reduce deposit rate and lending rate at the same time.” She pointed out that the rates are reduced only for bulk and not for retail customers. “And therefore only those who have large amount of money, which normally would be corporates, will be impacted by this and not retail customers,” she said.

Asked about deposits in banks increasing as a result of demonetisation, Bhattacharya said that the amounts coming into banks will not remain fully with it. “We expect around 10 to 15 per cent of it to remain in the bank, but the rest will have to go back into the economy, working for it, as transfer transactions because this was working capital in the economy,” she said.

She did not agree with the opinion that the demonetisation was as just another way to recapitalise banks, suggesting that it is not even known whether the government will directly benefit from this as is being made out by some media and analysts, but what definitely will happen is the revenue income of the government will go up, she said.

Speaking about clearing inconveniences to the common man, she said that 60 per cent of SBI ATMs were recalibrated and the exercise will be completed in another five days. “The exchange of currency will continue but into accounts, and November 24 will be the last day to give you cash across the counter,” she said.

She noted that Rs 500 notes will be available in Chennai and in Coimbatore soon. “Yesterday, 841 mobile vans were going around and delivering cash at various places including hospitals, railway stations and mandis. We have been sending the mobile vans wherever there has been a requirement,” she said.

While the merger of associated banks was on the track, there are several steps along the way, and “it will happen after government approval,” she noted.

When pointed out that students were facing problems, because loan recovery was handed over to Reliance and a student had committed suicide in Tamil Nadu due to this, she said. “If I don’t recover the student loan, how will I give back the depositor’s money?” she asked. “If you take a loan, you have to pay back. That is the principle of giving loans. If a community continues to repay loans, they can get more and more loans.”