India’s largest lender, State Bank of India (SBI) has announced cut in interest rates on term deposits by 25-50 basis points (bps). The revised rates will come into effect from Monday. The cut has been done across various maturities.
Since April SBI has reduced its interest rates five times bringing the cumulative reduction to about 175 bps. The revised rates will be applicable to fresh deposits and the term deposits that come up for renewal. The maximum rate of 7.75 per cent is being offered on deposits for 8 to 10 years.
As per revised rates on one year to less than two years it will be 6.5% instead of 7% offered earlier. The Chief financial officer S Ranjan told the new cut and renewals of old term deposits at lower will together bring down the cost of deposits by 6-7 bps.
The rate for deposits of one year to less than two years will be 6.5 per cent as against 7 per cent offered earlier. Today’s cut along with renewals of old term deposits at lower rates were expected to bring down the cost of deposits by 6-7 bps, said Chief Financial Officer S Ranjan.
In 2008-09 SBI’s cost of deposit was 6.30 per cent, which is higher from 5.59 per cent for 2007-08. In the last two-three years bank has been under pressure because of high-cost deposits it had constricted in order to fund credit growth therefore to protect its net interest margin (NIM) it had opted for aggressive reduction in its deposit rate.
In October 2008 bank had offered 10.5 per cent annual interest rate on 1,000-day deposits to retail depositors with which bank earned Rs 1,000 crore daily. On the other hand its NIM reduced to 2.93 per cent in 2008-09 from 3.07 per cent in 2007-08.
There has been reduction of up to 300 bps in deposit rates since December last year; in comparison to this the benchmark prime lending rate has been reduced by 150 bps. The bankers say although they find little room for an aggressive deposit rate cut but in the second quarter it will remain subdued. Dhanalakshmi Bank CFO Bipin Kabra pointed out as now the banks do not have any liquidity problem therefore banks will go for cut in their costs.
However the Andhra Bank Chairman and Managing Director K R Kamath say at this point banks cannot find any room for further cut in deposits rates.
Friday, July 31, 2009
Monday, July 27, 2009
SBI Davanagere main branch organize 2-day car, home loan mela
Country’s largest lender the State Bank of India (SBI), Davanagere main branch in association with its four other branches including Harihar is organizing a two-day `Home and Car Loan Mela' at Abhinava Renuka Mandir, P B Road, in Davanagere. The mela will be held for two days July 25 and 26 between 10.30 am to 5.30 pm.
Speaking at a press conference, chief manager of Davanagere branch H Ranganath informed, in this mela SBI is looking forward to do a business of at least Rs 15 crore. He added in earlier mela held in December bank had done a business of Rs 8 crore. In the mela loans will be sanctioned on the spot to the eligible customers. Ranganath said people coming to mela should carry any photo identity card, residential address proof, bank account statement for 6 months, salary certificate (for house loan) and a quotation for car loan.
The bank will also give one month time (till September 30) to the eligible customers to submit other documents, he said. He informed the bank will charge 8% interest rate for the first year, followed by 9% for the next two years and after that it will be charge floating rate according to the existing rates. He said the customers who take loan in the mela no processing fee will be charged from them.
In the press conference branch managers T Sidda Naik, Ashok Patvarkher, along with deputy managers Devendra Bellary and K Umapathy were present.
Speaking at a press conference, chief manager of Davanagere branch H Ranganath informed, in this mela SBI is looking forward to do a business of at least Rs 15 crore. He added in earlier mela held in December bank had done a business of Rs 8 crore. In the mela loans will be sanctioned on the spot to the eligible customers. Ranganath said people coming to mela should carry any photo identity card, residential address proof, bank account statement for 6 months, salary certificate (for house loan) and a quotation for car loan.
The bank will also give one month time (till September 30) to the eligible customers to submit other documents, he said. He informed the bank will charge 8% interest rate for the first year, followed by 9% for the next two years and after that it will be charge floating rate according to the existing rates. He said the customers who take loan in the mela no processing fee will be charged from them.
In the press conference branch managers T Sidda Naik, Ashok Patvarkher, along with deputy managers Devendra Bellary and K Umapathy were present.
Tuesday, July 7, 2009
Center advice SBI to have talks with bank unions on consolidation proposal
Last month the boards of SBI and the State Bank of Indore had passed resolutions approving the consolidation proposal. But the Center has directed the SBI not to follow the Reserve Bank of India the issue of acquirement of State Bank of Indore.
Now the Government has asked the SBI management to have talks with bank unions and try to convince them about the merits of the consolidation proposal.
Earlier SBI had approached the RBI and the Government for their approval of this transaction. An RBI may take some time to give approval because it seems that the central bank has some uncertainties over the method in which the SBI operations was carried out.
However the unions of all the six associate banks had called for protest strike on July 6 with regard to approval of consolidation proposal by boards of SBI and the State Bank of Indore.
The advice for meeting between the unions and the SBI management was given by the Deputy Chief Labour Commissioner, Mr N. K. Prasad, at a conciliatory meeting with the representatives of six bank unions, SBI management and senior management of all six associate banks of SBI.
Mr C. H. Venkatachalam, General Secretary, All India Bank Employees Association (AIBEA), told Business Line, “Since the SBI management has now agreed to discuss the State Bank of Indore merger proposal with the bank unions, we have decided to defer the strike call given for July 6 in all six associate banks”.
A number of bank unions are against the consolidation proposal, as the SBI senior management had not taken the employees into confidence before taking the decision on the consolidation.
For now, at the meeting the senior management of the other five associate banks — State Bank of Mysore, State Bank of Hyderabad, State Bank of Bikaner and Jaipur, State Bank of Patiala and State Bank of Travancore — had clearly informed that they had no proposal for merger with SBI.
The proposed acquiring of State Bank of Indore by SBI will be the first consolidation deal in the banking industry after the Finance Minister, Mr Pranab Mukherjee, last month had emphasized that public sector banks must look at consolidation as a serious option. He had said that consolidation is important in order to reduce risk to financial stability and also to face competition.
The Finance Minister had also clarified that the proposal for consolidation in the banking sector had come from the management themselves and that the Government will only play a supportive role as a common shareholder.
Now the Government has asked the SBI management to have talks with bank unions and try to convince them about the merits of the consolidation proposal.
Earlier SBI had approached the RBI and the Government for their approval of this transaction. An RBI may take some time to give approval because it seems that the central bank has some uncertainties over the method in which the SBI operations was carried out.
However the unions of all the six associate banks had called for protest strike on July 6 with regard to approval of consolidation proposal by boards of SBI and the State Bank of Indore.
The advice for meeting between the unions and the SBI management was given by the Deputy Chief Labour Commissioner, Mr N. K. Prasad, at a conciliatory meeting with the representatives of six bank unions, SBI management and senior management of all six associate banks of SBI.
Mr C. H. Venkatachalam, General Secretary, All India Bank Employees Association (AIBEA), told Business Line, “Since the SBI management has now agreed to discuss the State Bank of Indore merger proposal with the bank unions, we have decided to defer the strike call given for July 6 in all six associate banks”.
A number of bank unions are against the consolidation proposal, as the SBI senior management had not taken the employees into confidence before taking the decision on the consolidation.
For now, at the meeting the senior management of the other five associate banks — State Bank of Mysore, State Bank of Hyderabad, State Bank of Bikaner and Jaipur, State Bank of Patiala and State Bank of Travancore — had clearly informed that they had no proposal for merger with SBI.
The proposed acquiring of State Bank of Indore by SBI will be the first consolidation deal in the banking industry after the Finance Minister, Mr Pranab Mukherjee, last month had emphasized that public sector banks must look at consolidation as a serious option. He had said that consolidation is important in order to reduce risk to financial stability and also to face competition.
The Finance Minister had also clarified that the proposal for consolidation in the banking sector had come from the management themselves and that the Government will only play a supportive role as a common shareholder.
Thursday, July 2, 2009
SBI offers inventory funding for dealers at lower interest rate
On Monday State Bank of India (SBI) country’s largest lender announced from July 1 it will introduce a 'Dealers Accounts Drive' which will be in operation for over six-months. Under this new account bank will offer inventory funding for dealers at reduced interest rate.
SBI's CGM-SME, Mr B S Bhasin, explained, “The interest advantage to dealers would be to the extent of 0.50 per cent”.
Bhasin informed the new reduced interest rate will be in addition to the recent 0.50 per cent reduction in the bank's prime lending rate. In addition to this during campaign period dealers who take finance from the bank will also be get the benefit of full waiver of mortgage charges.
Mr Bhasin pointed out, “Normally, dealers who avail credit facilities from the bank offer some collateral security in the form of lending property. When such collateral security is offered as a part of the services, banks charge a fee for creation of such security. SBI has waived these mortgages for dealer accounts during the campaign period”.
Besides this, SBI will also offer a wide range of deposit and transaction products to dealers like roaming current account.
He added, “With over 11,800 branches, SBI offers access to dealers' current accounts from anywhere across the country”.
SBI's CGM-SME, Mr B S Bhasin, explained, “The interest advantage to dealers would be to the extent of 0.50 per cent”.
Bhasin informed the new reduced interest rate will be in addition to the recent 0.50 per cent reduction in the bank's prime lending rate. In addition to this during campaign period dealers who take finance from the bank will also be get the benefit of full waiver of mortgage charges.
Mr Bhasin pointed out, “Normally, dealers who avail credit facilities from the bank offer some collateral security in the form of lending property. When such collateral security is offered as a part of the services, banks charge a fee for creation of such security. SBI has waived these mortgages for dealer accounts during the campaign period”.
Besides this, SBI will also offer a wide range of deposit and transaction products to dealers like roaming current account.
He added, “With over 11,800 branches, SBI offers access to dealers' current accounts from anywhere across the country”.
Wednesday, July 1, 2009
Banks currency chests short of coins, RBI says demand is more than supply
Banks handling currency chests are facing shortage of coins. The State Bank of India (SBI) and Bank of Baroda (BoB) serving other banks have also confirmed that there has been short supply of coins from the Reserve bank of India (RBI) and for several months the coins have not been made available to the banks.
RBI deputy general manager K Mohan while confirming said that there is a short supply of as required by the different currency chests handled by different banks. The officer stated banks handling currency chests to supply coins in different regions are required to make a periodical serrate with their office, which takes care of 187 currency chests in 11 districts in western Maharashtra and Goa.
He informed, "We distribute coins equitably," he pointed out, but maintained that the demand was more than the supply. He explained that the RBI supplies coins to its currency chests when it obtains a remittance from the mint. "We depend on the government of India's mint," he said.
However the Margao branch of SBI had received coins of one and two rupees denomination some what in February this year, while BoB got supplies around October-November last year. It is not only the big time gap but also the volume supplied is also far less.
Although around 500 bags would have satisfied the need for coins in the denominations from Rs one to five, but the supply was around 60 bags each for the one and two rupee coins. BoB provide supply to several banks like the Union Bank of India, Dena Bank, Syndicate Bank, Bank of Maharashtra and Corporation Bank.
One of the customer, Vivek a restaurant owner confirmed that when he sent one of his employees to BoB to get coins worth Rs 1000, he returned empty handed. He added, "This time, I shall go to the bank myself and convince them to part with half the number of coins at least".
In the short supply of coins beggars, though, have proved helpful. As after day’s collection several beggars roaming around the city head for eateries with their coins.
A Syndicate Bank source pointed out that the bank depends on the BoB for its coin supply, but in the absence of proper supplies the bank and its clients are hard hit.
The Syndicate Bank, handles the currency chest in Karnataka, publicizes through newspaper advertisements the venue, time and date when the bank van would make available the currency. The source also added that at the time of festivals and weekly markets, the bank's Hubli branch makes available coins to those who require it for trading purposes.
In spite of the fact that chocolates, blades at grocery stores, coupons at restaurants and Maggie cubes are being used to settle bills in the absence of coins, and this works out to be a profitable venture for businesses. The South Goa Hotel and Restaurant Owners' Association has started a campaign asking people to write to the RBI office in Mumbai (department of currency management) about the problem.
RBI deputy general manager K Mohan while confirming said that there is a short supply of as required by the different currency chests handled by different banks. The officer stated banks handling currency chests to supply coins in different regions are required to make a periodical serrate with their office, which takes care of 187 currency chests in 11 districts in western Maharashtra and Goa.
He informed, "We distribute coins equitably," he pointed out, but maintained that the demand was more than the supply. He explained that the RBI supplies coins to its currency chests when it obtains a remittance from the mint. "We depend on the government of India's mint," he said.
However the Margao branch of SBI had received coins of one and two rupees denomination some what in February this year, while BoB got supplies around October-November last year. It is not only the big time gap but also the volume supplied is also far less.
Although around 500 bags would have satisfied the need for coins in the denominations from Rs one to five, but the supply was around 60 bags each for the one and two rupee coins. BoB provide supply to several banks like the Union Bank of India, Dena Bank, Syndicate Bank, Bank of Maharashtra and Corporation Bank.
One of the customer, Vivek a restaurant owner confirmed that when he sent one of his employees to BoB to get coins worth Rs 1000, he returned empty handed. He added, "This time, I shall go to the bank myself and convince them to part with half the number of coins at least".
In the short supply of coins beggars, though, have proved helpful. As after day’s collection several beggars roaming around the city head for eateries with their coins.
A Syndicate Bank source pointed out that the bank depends on the BoB for its coin supply, but in the absence of proper supplies the bank and its clients are hard hit.
The Syndicate Bank, handles the currency chest in Karnataka, publicizes through newspaper advertisements the venue, time and date when the bank van would make available the currency. The source also added that at the time of festivals and weekly markets, the bank's Hubli branch makes available coins to those who require it for trading purposes.
In spite of the fact that chocolates, blades at grocery stores, coupons at restaurants and Maggie cubes are being used to settle bills in the absence of coins, and this works out to be a profitable venture for businesses. The South Goa Hotel and Restaurant Owners' Association has started a campaign asking people to write to the RBI office in Mumbai (department of currency management) about the problem.
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