State bank of India to open new branches in China

The largest public sector bank of in India, State bank of India is planning to open a representative office in Guangzhou (China). The bank already has a branch in Shanghai and representative office in Tianjin .The bank has however planned to upgrade the representative office to a branch.

It can be noted that already a few Indian banks have their branches in China. Allahabad bank, a state owned Kolkata based bank has also announced extending it’s branch network in China recently.

“A foreign bank can approach the China Banking Regulatory Commission for upgrading a rep office to a branch upon completion of two years of operations,” said a bank official.

A foreign bank in China can take upto 5 years to turn into profit , a senior public sector official pointed that the bank has to be prepared for a long haul there.

Bhatt says, SBI has no immediate plans to revise prevailing interest rates

India's largest public sector bank, State Bank of India (SBI) has no immediate plans to revise its fixed deposit and lending rates. SBI Chairman, OP Bhatt told reporters, "I don't see any possibility of immediate change in our any rate." He added, "This possibility may occur after three-six months depending upon any change in the economic condition."

However, after the Reserve Bank of India raised repo and reverse repo rates fifth time the banks have said the hike in lending and deposit rates will be done in October.

Bhatt, without taking the name of SBI predicts the base rate may increase by 25 points which will result in increase in the interest rate of loans which are directly associated with the base rate, but all will depend on the economic condition.

As per new RBI guidelines, the banks have set their base rates and they cannot lend below that rate. Regarding raising Rs20,000 crore from the market through rights issue, he said, "we are talking to the government on the issue and I hope that our right issue will get the government's nod in the current financial year only."

In reply of prospects of SBI’s business in 2010-11 in view of the erratic monsoon season, he said, "though monsoon was not good in states like Orissa, Jharkhand and West Bengal, I hope that still we will register a growth of 20 per cent in the current financial year."

SBI to launch special service for visually handicapped

State Bank of India (SBI), the country's largest lender is planning to start a new service for the visually handicapped persons, as part of its responsibility to better service society

The new service named Self Service Banking Centre (SSBC) will become operational shortly. The Centre of this service has been set up at the Delhi Head office of SBI at Parliament Street. The Centre has handicapped friendly design with a ramp for wheelchairs.

For visually handicapped, the ATM has a dedicated Braille keypad facility.

Basically, SSBC is a staff less banking group offering multiple banking facilities, namely ATMs, Internet banking and mobile banking.

Senior Bank officials told, “Roll out of the SSBCs is aimed at increasing customer convenience and improving access to financial services.”

Recently SBI Chairman OP Bhatt inaugurated the Centre soon it will be opened for public.

India is possible a unique to country to have an extensive and elaborated program of financial inclusion. Currently it has tied-up with state-run Banks to provide 40 per cent of their lending to customers from the priority sector, including agriculture, artisans, small and medium enterprises and scheduled castes and tribes.

Most of the government owned banks are giving loans to students for pursuing studies, which is growing rapidly.

The public sector banks are also in the process of covering the unbanked sectors of the economy in the urban and rural areas where up till now banking has not reached. In these areas large segment of society remains under the clutches of money lenders, who charge exorbitant rate of interest.

The state-owned banks are also taking new measures to reach out to the less privileged groups and those having problems by virtue of a chance of birth or that developed later on in life. They need compassion and help.

The private sector banks who are earning profit are also reluctant to start such services the Banks like HSBC has already started offering financial inclusion services.

In countries like South Africa, the banking services are highly expensive for common customers. For instance, on not maintaining minimum balance in the account the banks charge for this, there is charge for account statement also.

In spite of a nationwide program of Black empowerment, the black population of South Africa is still poor and finding difficulty in using financial services, including banking and insurance.

According to experts India is being looked as a role model by many countries for other developing countries to follow especially for financial services. India banking sector was not much affected by the global meltdown while the banking sector in the West faced very bad financial crisis. The Indian banking sector financial services include elaborate program of financial inclusion and now special facilities for certain sections like women and small enterprises and the latest special services for visually handicapped persons by the biggest bank of the country.

Public sector banks fix base rate at 8.25%, higher than SBI

Most of the public sector banks were looking at country’s largest lender the State Bank of India for setting their base rates. Now most of them have fixed their minimum base rate in the range of 7.75 per cent to 8.25 per cent, higher than that of market leader SBI.

From July 1, the new rate system has replaced the Benchmark Prime Lending Rate (BPLR) that varies between 11-13.75%. The new lending rate system has been introduced to bring about more transparency in the lending operations of banks.

Bank of Baroda, Oriental Bank of Commerce, Allahabad Bank, Bank of India, Indian Bank and IDBI Bank have set their rate at 8 per cent. Syndicate Bank, Dena Bank and Indian Overseas Bank have fixed it at 8.25 per cent.

Among the private sector banks Dhanalakshmi Bank and DBS Bank India have fixed the rate at 7 per cent, lower than that of SBI, while Karur Vysya Bank’s- Kerala based private sector lender has fixed the rate at 8.5%.

Mangalore based Corporation Bank, State Bank of Mysore and Federal Bank has fixed the rate at 7.75 per cent. UCO bank has fixed its rate at 8 per cent.

Under this new system banks will charge interest rates over the base rate depending on borrower’s credit profile. RBI has clarified that the new system will not be applicable to concessional loans such as agriculture, export and other specified sectors.

The base rate system will be applicable for all new loans as well as existing loans that come up for renewal. Existing loans based on the BPLR system might continue till maturity of the existing contract and will be renewed on the basis of new system.

The existing borrowers have been given the option to switch over to the base rate system before the renewal or expiry of the existing contract without any charges.

SBI overseas branch network increased by 50%

The country’s largest public sector lender State Bank of India (SBI) has opened more overseas branches and its branch network has increased by almost 50%, even after the global financial crisis, informed a top official. SBI chairman OP Bhatt in its 55th Annual General Meeting said, “As we have spread our overseas branches across 32 countries in the world, we have increased our foreign office branches from 92 as on March 31, 2009 to 142 as on March 31, 2010.”

During the fiscal, bank opened six new overseas offices at Clementi, Marine Parade and Toa Payoh in Singapore, Kowloon in Hong Kong, Harrow in the UK and Lenasia in South Africa, and one branch by the bank’s wholly owned USA subsidiary, SBI (California ) Ltd, at Washington DC. Moreover bank opened overseas subsidiaries offices in Bank SBI Indonesia (5 offices), Nepal SBI Bank (3 offices) and SBI Mauritius (1 office).

The SBI chief told, “We have also increased our stake from 50 per cent to 55 per cent in Nepal SBI Bank, during the FY2010, making it the bank’s sixth foreign banking subsidiary”.

RBI gives nod for SBI & State Bank of Indore merger

SBI & State Bank of Indore merger gets approval of RBI

Finally the merger of State Bank of India and its associate, State Bank of Indore has got clearance from the Reserve Bank of India. According to sources the central bank has given its approval for the merger.

But SBI has not yet given any official confirmation about this.

Last year, the merger of SBI and State Bank of Indore was approved by the central board of the bank and later, the Centre also gave in-principle approval to the proposal. At present SBI have 98 per cent stake in State Bank of Indore.
Thus for the merger SBI has announced a share swap ratio of 34:100 for the merger. It has agreed to give 34 shares of SBI for every 100 shares of State Bank of Indore held by minority shareholders. For this purpose, SBI will be issuing up to over 1.

SBI sanctioned diary loan to farmers at credit camp

In Patna, the Danapur branch of the State Bank of India (SBI) organized a credit camp for dairy finance on the occasion of “World Milk Day”. In this camp bank sanctioned dairy loan to the farmers. The camp was attended by large number of farmers from neighboring areas.

On the occasion Patna Dairy Project MD Sudhir Kumar Singh highly-praised the pro-active role of SBI in dairy finance and assured to give full support to the bank in making its initiative successful in future.

In the camp bank sanctioned dairy loan of Rs 95 lakh to around 102 farmers in the presence of S K Singh, AGM (AGL), LHO, Patna. Other senior bank officials present on the occasion included Saloni Narain, A Banerjee and Biren Singh.

SBI to launch ‘mobile wallet’ a cashless payment system

The State Bank of India (SBI), country’s largest lender in the coming months will be launching ‘mobile wallet’- a first of its kind which will reduce weight of our wallets as we don’t have to stuff our wallets with cash when we go for buying vegetables or going to a restaurant. It will also speed up the process for transactions linked to savings account.

A senior official from the bank said, “It will be a stored-value account (based on a) customer handset and it is primarily meant to attract new customers.”

In mobile banking service, the consume sends a payment request via a short messaging service (SMS) text message or Unstructured Supplementary Service Data (USSD) to a short code and a charge is applied to the customer’s phone bill or, in the proposed SBI unique mobile wallet scheme.

SBI’s mobile wallet scheme will be operational most probably either by the end of August or September this year. The official informed that bank will not levy any charges for opening a mobile wallet and for mobile-to-mobile transactions.

Bank customers who have high-end mobiles can use the service through an application provided by the bank, while low-end mobile users can use SMS.

The high-end mobile users will also be allowed to withdraw cash up to Rs 5,000. The whole transaction process will be secure as the data will go through end-to-end encryption. While the low-end mobile users will not be allowed to withdraw cash but, these consumers will be allowed to use a mobile only for small payments.

However bank has not clarified whether it will charge for cash withdrawals. But the official said the charges for withdrawal can be 1% on the cash withdrawn from an account. At present, the Reserve Bank of India (RBI) allows only Rs5,000 to be withdrawn through such mobile transactions.

For providing this service, official told, SBI has already signed an agreement with various service providers like Vodafone Essar, Bharti Airtel, Aircel, Tata Docomo and Idea.

Recently, the SBI customers who did not had mobiles equipped with Java or GPRS allowed them to access its application- —‘State Bank freedoM’- which could be availed from all application bases, over Wireless Application Protocol (WAP), and over USSD.

Using this service customers can transfer funds, view balance and mini-statements of their accounts, pay bills, request for cheque book, recharge of prepaid mobile connections, viewing of demat account details, top-up of direct-to-home (DTH) satellite TV services, and m-commerce transactions.

SBI launched its 'State Bank freedoM’ service on a pilot basis in March 2009 at all its branches.

SBI to reach out to around 50,000 unbanked villages as part of financial inclusion drive

The country's largest lender, State Bank of India will be reaching out to around 50,000 unbanked villages in the current fiscal as a part of its financial inclusion drive.

“The bank under financial inclusion initiative has planned to cover 50,000 unbanked villages during 2010-11 which will take total reach to 1,50,000 villages,” a senior official of SBI told PTI.

To achieve this target the bank will be hiring 15,000 business correspondents who will visit rural areas and help people in opening bank accounts.

The official said, “In order to expand our presence in the unbanked areas, the bank intends to hire around 15,000 (business correspondents) in 2010—11.”

The official said as it is not possible for banks to open branches in every villages, thus with the help of a business correspondent and business facilitator model it will be possible to take banking facilities to every part of the country.

In Budget 2011, Finance Minister Pranab Mukherjee had said, “To reach the benefits of banking services to the ’Aam Aadmi’ (common man), the RBI had set up a high-level committee on the lead bank scheme.”

Mukherjee had said, “It is also proposed to extend insurance and other services to the targeted beneficiaries. These services will be provided using the business correspondent and other models with appropriate technology back up. By this arrangement, it is proposed to cover 60,000 habitations”.

SBP extended its teaser loan scheme & re-introduced car loan scheme

State Bank of Patiala has also extended its teaser rate scheme of 8% on Home Loan and has re-introduced Ezee Car Loan Scheme till 30th June, 2010. Under its home loan scheme, SBOP is offering fixed rate of interest of 8% for the 1st year and 9% for 2nd and 3yrd year and after that the prevailing rate linked with BPLR/ Base Rate will be applicable. The maximum tenure of the loan is 25 years.

Bank has also re-introduced its Ezee Car Loan Scheme which will be effective from 7th May, 2010. Under this scheme bank is offering fixed rate of 8% for the 1 st year and 10% for 2 nd and 3 rd year and thereafter prevailing rate linked with BPLR/ Base Rate will be applicable. The maximum tenure is 7 years.

Bank said it will not charge repayment penalty if borrower offers to pre-pay the loan at the time of reset in both house and car loans.

SBI installs ‘Tiny Branch’ at its hilly region branch office

SBI has installed ‘Tiny Branch’, at its hilly region branch of Seiling in Mizoram. Earlier bank was finding difficulty in tapping customers in the naxal-hit Dantewada or the hilly region of Seiling in Mizoram, thus it was looking for a solution which is low-cost, safe and easy to operate. When Anurag Gupta, founder and director of the Zero Mass Foundation (ZMF) approached SBI with his idea of the ‘Tiny Branch’, the bank accepted it.

The Tiny Branch costs Rs 15,000 per installation and comprises of a mobile phone and a fingerprint scanner. A Nokia phone has been designed specially for ZMF to identify RFID tags; it also has an inbuilt application that helps in new account opening and to carry out other banking transactions.

The phone will be able to hold data of up to 50,000 customers for a period of five years. The phone will also take pictures of the customer for making the account card and records his name in his own voice as a voice tag, to be used later for verification purposes.

Along with written details, during enrolment, five fingers are scanned and the fingerprints recorded. The equipment can record details in 11 languages including Arabic.

Once bank completes it procedure in all villages, ZMF will step in, looking for help from the village elders or the Panchayat to appoint Customer Service Points (CSPs). CSPs equipped with mobile phone and fingerprint scanner, will be responsible for acquiring customers and also undertake banking transactions in the village.

Gupta explained, “We mostly recruit women, preferably with matriculate level of education.” There are 24,000 CSPs that the assist ZMF to carry out the bank’s business out of which 98% are women. It is essential that local branch should be near for the Tiny Branch to deliver cash, form submissions/collections and issuing of new account cards.

The devices work on a battery that can be charged using a solar panel so there is no problem in the installation of the devices. Similarly there is no need of internet connectivity for enrolling customers or carrying out transactions. However, transactions have to be backed up on an hourly basis through GPRS. Sometimes there can be connectivity problem?
“CSPs sometimes tie the mobile phone to a bamboo stick and hoist it on top of their house to transmit data,” says Gupta about the ingenious ways used in difficult conditions.

Gupta has been always innovative, from being an architect to creating smart systems like mchek — a mobile payment platform to the GO Mumbai smart card. He said, “The Tiny Branch is one of our most important creations and I had to let go of others in order to concentrate on this.”

Although Rs 15,000 might be low-cost, Gupta is far from being satisfied. He has brought down the cost of the system, he also hopes to install 250,000 of these Tiny Branch’s across Indian villages.

SBI takes over the possession of the mortgaged property on loan defaulter

The Administrative Office of State Bank of India (SBI), the country’s largest lender located in Civil Lines, Ludhiana has taken over the possession of the property mortgaged in account of Sandali Darwaja Resorts and Restaurants Pvt Ltd. (erstwhile NIF Pipes) having its office at 853, Industrial Area -A, Ludhiana) through Bhagat Singh residing at 510-R, Model Town, Ludhiana.

SBI had given loan against the property which was mortgaged with it through Bhagat Singh. But the borrower defaulted in the repayment of loan amount which amounted to Rs 1,41,32,073 as on November 30, 2009.

The bank before taking this extreme step served 60-day notice to the borrower but the party did not came forward. Bank carried out the process with the assistance of GATS Financial Reconstructions Limited. GATS Financial Reconstructors Limited while revealing this in press release said, “The party had availed of certain credit facilities from the bank and had defaulted in the repayment of the bank dues to the tune of Rs 1,41,32,073 as on November 30, 2009.

The bank had served a 60-day notice to the borrower but the party never came forward. Hence the bank took the possession of the property mortgaged in the aforesaid account.”

SBI becomes the largest lender of the country

State Bank of India has declared itself as the largest lender of the country. The bank has done the total business of over Rs 13, 78,000 crore for the financial year 2009. Up till now no other Indian bank has been able to even nearer this figure in terms of total business achieved by SBI during this period of time.

SBI is followed by Punjab National Bank (PNB). PNB has become the second largest bank of the country by replacing the largest private sector bank ICICI bank. PNB has done the total business of Rs 4, 35,000 crore for the fiscal in terms of total business with total deposits and loans.

On the other hand ICICI Bank has done a total business of Rs 3, 83,223 crore for the same fiscal year.

ICICI Bank total deposits stood at Rs 2, 02,017 crore while total advances were Rs 1, 81,206 crore. However PNB has managed to register a 20% increase in total business during the current fiscal.

The other public sector lenders Bank of Baroda and Canara Bank had also surpassed the Rs 4 lakh crore figures in total business.

SBI “teaser rate” on home loans will continue till March end

State Bank of India (SBI), India’s largest public sector bank, was the first bank to introduce the “teaser rates” on home loans. The bank has made it clear that it will continue with its limited period offer on home loans, popularly known as ‘teaser rates’ till the end of the current financial year, although there have been increasing differences with RBI on the issue.

SBI chairman OP Bhatt speaking on the sidelines of a function in Delhi on Tuesday, said,

“They’ve not objected. SBI would not do anything which RBI objects to”.

Over the past one month the central bank had raised the issue of teaser loans – the special rate home loans.

Meanwhile on Monday RBI deputy governor Usha Thorat had made it clear that banks must have taken whatever message was given by the RBI. Ms Thorat had last month said: “Teaser rates are increasingly being offered, which is a cause for concern.”

Another RBI deputy governor KC Chakrabarty had also expressed his disapproval by stating that the benefits of the scheme should also be extended for the existing customers.

The central bank had also pointed out that banks should provide the information about the implications of such rates to their borrowers and must appraise repaying capacity of the borrowers when the rates go up. Under teaser loans the loans step-up where interest rate is a low fixed rate in the initial years but is benchmarked to market rates after 2-3 years with a minimum floor.

In the next one month the teaser rate scheme of almost all banks is going to expire therefore the banks will be reviewing their limited period offers. Meanwhile Axis Bank has withdrawn the similar scheme after RBI has shown its concern over these schemes.

Moreover RBI’s hike of cash reserve ratio (CRR), the portion of deposits that banks have to maintain with the central bank, by 75 basis points to 5.75% will force banks to withdraw these schemes. The CRR hike is likely to absorb around Rs 36,000 crore from the system.

Mr Bhatt has also indicated that lending rates might be raised from the second quarter of 2010-11. He added, “So far as bank lending rates are concerned, I do not expect rates going up before May-June.”

SBI, this fiscal has set target to achieve loan expansion at the rate of 16-18 %. Mr Bhatt said, “We are already at 17% and there is no immediate pressure on interest rates.” On the other hand according to RBI the credit expansion target will be at 16-18% for this fiscal.

However on Tuesday, SBI launched its new scheme for Naval Personnel, under which it will be offering home, auto and personal loans at 50 basis points lower than the floor rate.

SBI Bank held adalat took up loan recovery cases

In Patna State Bank of India (SBI) organized a Bank Adalat in its Gulzarbagh branch in which around 53 cases were disposed of. The proceedings of the adalat were personally monitored by SBI AGM Anjani Kumar Sinha under the direct supervision of DGM T V S Ramana Rao. Hearing of around 53 cases related to loan recovery was taken up and were harmoniously disposed of on the spot, Sinha informed.

AGM told, the bank will take severe action against all those people who fail to repay the loan money in time. The banking institution will have to forcefully take legal action against the defaulters under the Bank Act and their mortgaged property will be attached if the defaulters did not repay the loan amount within the specific time, the AGM told and added borrowers must cooperate with the bank and try to maintain good relation with the bank.

The AGM told TOI that the bank is holding Bank Adalat at regular intervals at different places adjoining the state capital in order to help borrowers, especially defaulters, to pay their loan money at their doorsteps. In addition, bank will prefer to get into compromise with defaulters on some genuine points and help them to repay their loan easily, he said and added bank was able to recover around Rs 5 lakh at this adalat and large number of borrowers came to the adalat facing bad weather condition.

At the branch at the time of proceedings Chief Managers B P Singh, Binod Kumar, M P Singh and loan recovery in-charge Ashutosh Narain Sinha were also present.

SBI to increase fee-based income through PoS terminals

In 2010-11 State Bank of India (SBI), country’s largest lender will be setting up about 150,000 point of sale (PoS) terminals for debit and credit card payments across India. This way bank will be able to increase its fee-based income. Country’s largest bank, SBI said in its Request for Proposal (RFP), "The present EoI (expressions of interest) is for the purchase of 135,000-150,000 POS terminals across the country during the first year of operations or 2010-11 and also for the managed services during the warranty period or the first year of deployment."

SBI in the first five years of its operations has plans to install around 600,000 PoS terminals for this last year bank floated RFP for the selection of joint venture partner for merchant acquiring business and the selection process is in the final stage. As per the report from SBI the last date for submission of bids is January 25, 2010. The bank is also thinking of acquiring the PoS terminals on an outright purchase basis. Bank is also looking at other options like leasing the terminals as the asset return or non-return and periodical rentals.

To manage the business of the merchants a wholly –owned subsidiary system will be adopted which will include acquiring bank identification numbers (BINs) from the schemes, as well as managing services for PoS terminals, among others. The managed services will include installing PoS terminals at customer location, their replacement, merchant training and maintenance, among others.

Banks’ plan of business circulation based on the new line of operation is focused on a pan-India scale, with metro, urban, semi-urban and rural centers, urban, semi-urban and rural centers, SBI said. At present the State Bank Group has installed more than 18,000 automated teller machines (ATMs) across the country and has issued over 60 million debit cards.