SBI and Allahabad bank reduced interest rates

The two public sector banks State Bank of India India's largest lender and Kolkata headquartered Allahabad Bank has reduced their interest rates for new loans to micro, small and medium enterprises by 1 percent. The new rates will come into effect immediately in line with the special package announced by the Reserve Bank of India and India Banks' Association.

State Bank of India has reduced interest rates on working capital loans to micro, small and medium enterprises by 0.5-1 per cent to be effective from 16 December. The State bank release stated, “With this reduction, the micro enterprises will be able to avail working capital finance at as low as 10.25 per cent”. Bank sources informed the reduction in rates will be applicable for small firms with working capital limits up to Rs 10 crore.

However Allahabad Bank said that new interest rates will be applicable for all existing and new loans to micro industries and has been reduced by 100 basis points. Whereas interest rate for small and medium enterprises with fund based exposure up to Rs 10 crore has been reduced by 50 basis points.

Allahabad Bank has also taken a decision of reducing interest rates for fresh housing loans up to Rs 20 lakh for a maximum tenure of 20 years to be available from the bank till 30 June 2009. The bank release stated, "The revised rate of interest for a loan up to Rs 5 lakh will now be 8.5 per cent (fixed) and for loan over Rs 5 lakh to Rs 20 lakh, the interest rate will be 9.25 per cent (fixed)".

SBI organized loan mela in collaboration with Jamkash Vehicleads Pvt Ltd

In Srinagar the State Bank of India (SBI) organized the loan mela, received a good response. Scores of customers visited the mela on Wednesday.

SBI Regional Manager Ajay Gupta informed that the mela was organized in the main branch at Residency road, with an aim to make people aware of the facilities being provided by the bank to its customers.

The mela was organized in collaboration with Jamkash Vehicleads Pvt Ltd with the main objective to sanction spot car loan to customers. In the mela latest models of Maruti vehicles were also displayed.

Gupta said in addition to car loan, the bank also offers housing and other loans to its customers. Gupta and the bank’s Chief Manager B L Jalali informed that the SBI is also offering complete financial services, including insurance, mutual fund and gold coins.

Jalali added bank is also providing conventional deposits and loan facilities for commerce; industry and agriculture sectors. He stated the bank is paying 10.50 per cent interest on deposits for 1,000 days and to the senior citizens bank is offering 11%.

Banks charge extra for deposit over 1000 notes

From now if you have to deposit a big amount in cash in the bank then be ready to pay extra. According to the new SBI rules, Rs 100 will be charged for every 1,000 notes, irrespective of denomination, over the limit of 1,000 notes.

Recently such incidence was reported when Madan Joshi, a scrap dealer at Howrah's Bajrang Market, got a rude shock when he went to deposit Rs 2,00,000 in cash - a routine he has been following several times a month for a long time in his account at the Belur branch of the State Bank of India. The cashier at the bank accepted the cash, but charged him Rs 200 for counting them, and this sound very unusual. "I was told that from now on, if I deposit such big amounts in cash, I will have to be prepared to pay extra. But why should this happen?" Joshi asked.

Joshi told, "I was told that I should make it a habit to pay in cheques if I have to avoid paying this extra counting charge from now on".

"I am extremely upset with the new system, as for businessmen like us, who need to withdraw and deposit cash all the time, it would mean losing a lot of money!" he was disappointed at this. Therefore if you are a businessman like Joshi and used to transact large amounts of cash across the counter, then be prepare to pay extra as banks have started levying charges on cash deposits in current accounts.

"If somebody deposits more than 1,000 notes of any denomination, then he has to pay handling charges," an SBI official said.

As per the his information few months back he received a circular from the SBI corporate centre on levying cash handling charges on cash deposits in current accounts. Giving details about the process, the official said that the bank does not levy charges up to 1,000 notes. So, if a customer deposits Rs 1 lakh with 1,000 notes of Rs 100, he does not have to pay any charges. But if the notes are of Rs 50 denomination, the depositor has to pay Rs 100 as counting charges.

"For each additional 1,000 notes over the specified limit will attract a charge of Rs 100. We generally do this to discourage huge cash transactions. The bank has to depute huge manpower for computation and supervision of fake notes. The counting machine can count notes but cannot differentiate between fake and soiled notes," he said.

The officials of Axis Bank and HDFC Bank also informed that they have started charging cash handling charges for current accounts. When it was inquired from a top RBI official he told that it has given some flexibility to the banks in the areas of cash handling and management a few months back. "The bank can levy cash handling charges if they want to do so. This is up to the bank," he added.

On Monday Credit card major SBI Cards & Payments Services Pvt Ltd (SBI Card) informed that its card issuance has come down to nearly a third of its peak monthly issuance of one lakh cards, which reflects the general downturn in the economy.

In India the non-banking finance company, which is a joint venture between the State Bank of India (SBI) and GE Money, is having a credit card base of over three million.

As per the information provided by Diwakar Gupta, CEO, SBI Card, the delinquency level for the industry averaged around 15 per cent and SBI Cards portfolio reflected this trend. Outstanding credit of SBI Card is around Rs 2,000 crore.

“We are seeking to build a quality portfolio. We are reaching out to card holders, who are having a good track record but are facing repayment difficulties due to the current economic downturn, with restructuring packages, which includes a softer Equated Monthly Installment option,” said Gupta on the sidelines of the launch of the ‘SBI Dena Bank Card’.

He said that the company, which has suffered a loss of Rs 150 crore in 2007-08, has been fast in dealing with delinquencies.

There has been increase in the cost of funds up to 14 per cent, earlier it was nine per cent levels, the card company recently has hiked the interest rate charged on outstanding credit rollover from 3.1 per cent to 3.35 per cent per month.

The CEO informed that on seeing the business requirement, SBI Card might require capital infusion next year, and further added that the company’s current capital adequacy ratio is over 11 per cent as against the regulatory minimum of 10 per cent.

While speaking during the launch of the SBI Dena Bank Card, Bhaskar Sen, Executive Director, Dena Bank, said the new credit card will have rich features and will be trustworthy offering for Dena Bank customers.

In addition to offering an attractive rewards program, the card, will also offer customers benefits like Flexipay — an easy installment plan where customers can choose the one best suited to their financial needs, and nil surcharge on purchase of fuel and lubricants at any petrol pump across India. The card has two variants --- gold and international.

SBI to be the sole loan provider for Nano cars

The State Bank of India (SBI) will be the only bank which will provide car loan to buy Nano, across the country. Tata Motors and State Bank of India (SBI) have got into a first-of-its-kind alliance for extending car loans to buyers for the world's cheapest car - Nano.

Nano dealers will accept only SBI cheques. Even the people who want to do payment in cash need to have to issue demand draft of SBI in favor of Tata Motors.

According to reliable sources the companies are having talks for finalizing the terms and conditions of the alliance but the formal announcement is likely to be made just before the first Nano rolls out from either Pantnagar or Pune.

Tata Motors sources said they want to utilize the vast network of SBI and its seven associate banks. SBI is having a branch network of around 11,000 branches. Moreover, its seven associate banks have a combined network of 2,000 branches.

Since the Nano is going to be a common man's car, therefore SBI with its associates has been considered to be the best fit for a product that has to get customers from rural India.

As Tata Motors have shifted its plant from Singur to Sanand, it has also enhanced its manufacturing capacity from 3 lakh car in a year to 5 lakh car a year.

As promised by the Tatas the Nano car will be rolled out by the last quarter of this year. The first car will be rolled out of the Tata plants in Pantnagar, Uttarakhand and Pune in Maharashtra.

SBI increases interest rates on foreign currency deposits

State Bank of India (SBI) has increased interest rates on foreign currency deposits. The new rates will come into effect from today.

According to bank release after the hike the USD deposits with a 1-2 year maturity will now have a rate of 4.21 per cent (3.71 per cent) while for tenures 2-3 year and 3-4 year it will be 3.52 per cent (3.02) and 3.81 per cent (3.31) respectively.

Likewise, deposits in Euro and Pound in 1-2 years maturity rates have been increased to 5.74 per cent (5.24) and 6.77 per cent (6.27), the bank said.

SBI has also hiked the resident foreign currency accounts (RFC) and non resident external (NRE) fixed deposit scheme rates.

Bank sources said RFC deposits, having the tenure of 1-2 years will have a rate of 4.21 per cent whereas deposits having tenure of 2-3 year will attract a rate of 3.52 per cent.


Bank further added the revised rates for NRE deposits having 1-2 years, 2-3 years and 3-5 years maturities will be 4.96 per cent (4.46), 4.27 per cent (3.77) and 4.56 per cent (4.06) respectively.

SBI directed to pay Rs 30,000 to govt official for wrongly blocked credit card

In May 2000 Krishna Kumar, a senior government official got a rude shock, after having a pleasant dinner evening with his family at the time of payment of bill he came to know that his credit card has been put on a high alert. When Kumar gave his credit card for the payment of the bill at the restaurant after the dinner, the restaurant manager told him that his credit card has been put on a high alert, listed as a ‘pick up card’ by his bank and would have to be seized.

When Kumar, a legal adviser with the Ministry of Law verified with the bank authorities about his credit card he was embarrassed to learn that the State Bank of India to “prevent an anticipated misuse by any third party” had indeed blocked his card.

However the ‘assumption’, proved to be costly for the bank when the State Consumer Commission took it to task in its recent order and directed SBI to pay a sum of Rs 30,000 as compensation to Kumar.

Expressing the act as the “grossest kind of deficiency in service”, Justice J D Kapoor, president of the commission, disproved the bank’s plea that it had done so to prevent misuse of the card. Justice Kapoor added, “It was obligatory on part of the service provider to immediately inform the card holder that his card was being blocked.”

The commission observed that “deficiency” of service on part of the bank can clearly be seen from the fact that the bank officials had “not verified” whether the card was in possession of the actual cardholder.

“Although the card was blocked to protect the interest of the customer, such actions are not advisable and it is incumbent upon the bank to inform the customer immediately, so that he can arrange for an alternate source of cash,” the commission noted.

Later Kumar sent a legal notice to SBI claiming damages and then approached the State Commission for redressal. In his complaint he stated that he was yet to get his card back from the authorities.

On the other hand bank on its part gave a statement that it had blocked the card in April the same year, as it had received three requests from an airline to verify a transaction that had been attempted by the cardholder.

The airline had informed that the transaction was beyond the permissible credit limit on the card. Therefore, foreseeing that a third party or the card holder himself was trying to make an “unauthorized transaction”, the authorities blocked the credit card. The bank authorities further added that it had attempted to contact Kumar via phone and courier, although it was unable to present any printed records of the above.

Disapproving the bank’s claims, Justice Kapoor directed it to pay the compensation, considering the “mental agony, humiliation, and loss of reputation” suffered by the complainant.

“The credit card has still not been returned to the complainant, who amounts to further deficiency in service on part of the bank,” Justice Kapoor added, instructed the bank to pay the sum within a month from receiving the order.