State Bank of India (SBI), country's largest bank, is planning to make its position among top ten banks in the world in the next three to five years, pointed out SBI chairman O P Bhatt during his maiden visit to Vadodara on Monday. Bhatt spoke to select chief executive officers (CEOs) of Gujarat Inc as part of CII-CEO Network series.
Bhatt told media persons, "SBI has set a high global ambition and we plan to open ten new foreign branches this financial year". The new branches will be opened in Hong Kong, Singapore and United Kingdom among other places.
He stated, "Even if one puts together market capital of 89 scheduled banks of India, it is not equivalent to that of one leading bank of China," and added that presently no Indian bank is positioned among top 50 banks of world. Bhatt while supporting for consolidation said Indian banks should grow as Indian industries are becoming global with investments outside India.
Meanwhile the Union minister of finance Pranab Mukherjee has given approval on banking industry's consolidation in a recent meeting with bankers, on the other hand the Associate Banks' Officers Association (ABOA) has opposed to the idea of merger and announced a protest strike on July 3, 2009, fearing job losses.
Bhatt, while quoting his observation on the merger of State Bank of Saurashtra with SBI, has given assurance that there will be no retrenchments. He added, "There was not even a ripple, the merger was smooth and we can do the same with other associate banks as well".
In spite of the recessionary phase, the bank has done 30,000 recruitments last year and this year too there will be 10,000 fresh recruitments.
Tuesday, June 16, 2009
Wednesday, April 22, 2009
SBI to extend special home loan interest of 8% till September
This year the State Bank of India (SBI) had announced a special home loan scheme in which it had capped the interest rate at 8% for one year. The scheme came into effect from February is expected to be extended by another five months up to September.
When SBI announced the scheme it had caused a flutter in the market, popped up the competition in the banking and home finance space. Reacting to the SBI announcement Deepak Parekh, chairman of the country’s largest mortgage company HDFC, even termed the reduction in interest rates a ‘gimmick’. Afterward, Canara Bank and LIC Housing Finance also reduced rates to attract customers. Although, SBI’s concessionary offer remains the lowest to date.
Officials’ privy to the development pointed out, “The proposal is to extend the home loan scheme up to September to benefit those who felt the April deadline was insufficient for availing of the scheme”. They added, “The proposal has been forwarded to the chairman’s office and approvals for the extension will be made public shortly. The deposit level at the bank is robust and SBI can afford to offer the loans at lower interest for an extended duration”.
Moreover, on Saturday SBI extended soft loans being offered to its existing small and micro enterprise customers under SME Help (to purchase fixed assets, including generating sets) and SME Care (for working capital loans) schemes to September 2009. Therefore term loans in the SME Help scheme will now be available for two years at 8% against one year when the scheme was launched earlier this year.
The bank has even slashed the interest rate to 8% for all new SME customers with loan requirements up to Rs 5 lakh. For the working capital also the reduced rates will be applicable as well as term loans unless they are offered they are covered under the credit guarantee scheme for small and micro enterprises (CGTMSE).
Furthermore, for new SMEs with fund-based loan requirements above Rs 5 lakh but below Rs 25 lakh, the bank is offering fixed rate of interest of 10% for two years to units covered by CGTMSE.
As per information provided by officials besides home loans, the bank will probably extend the deadline for auto loans and for warehouse-based receipts loans from May to September. However these schemes, are offering auto loans at 10% for one year and ware house based receipt loans at 8%, and were announced on February 20. According to banking analysts lower-than-expected response from borrowers may have resulted in SBI extending its loan schemes.
At present the demand for home loans is very low because buyers are waiting for property prices to fall before they can avail of the reduced interest scheme. Moreover Canara Bank's decision to offer a fixed rate of 8.25% on home loans up to December '09 might have also impelled SBI to extend its own scheme till September '09.
Recently, PSBs have been under intense media glare for failing to reduce their benchmark prime lending rates (PLR) to the same extent that key policy rates have been systematically brought down to encourage bank lending. In fact , PSBs say that over three-fourth of their disbursals are at sub-PLR levels and when they will reduce the PLR they will be forced to reduce interest rates further on loans that are linked to the prime rate such as on farm loans. Therefore they say this can affect their profitability.
When SBI announced the scheme it had caused a flutter in the market, popped up the competition in the banking and home finance space. Reacting to the SBI announcement Deepak Parekh, chairman of the country’s largest mortgage company HDFC, even termed the reduction in interest rates a ‘gimmick’. Afterward, Canara Bank and LIC Housing Finance also reduced rates to attract customers. Although, SBI’s concessionary offer remains the lowest to date.
Officials’ privy to the development pointed out, “The proposal is to extend the home loan scheme up to September to benefit those who felt the April deadline was insufficient for availing of the scheme”. They added, “The proposal has been forwarded to the chairman’s office and approvals for the extension will be made public shortly. The deposit level at the bank is robust and SBI can afford to offer the loans at lower interest for an extended duration”.
Moreover, on Saturday SBI extended soft loans being offered to its existing small and micro enterprise customers under SME Help (to purchase fixed assets, including generating sets) and SME Care (for working capital loans) schemes to September 2009. Therefore term loans in the SME Help scheme will now be available for two years at 8% against one year when the scheme was launched earlier this year.
The bank has even slashed the interest rate to 8% for all new SME customers with loan requirements up to Rs 5 lakh. For the working capital also the reduced rates will be applicable as well as term loans unless they are offered they are covered under the credit guarantee scheme for small and micro enterprises (CGTMSE).
Furthermore, for new SMEs with fund-based loan requirements above Rs 5 lakh but below Rs 25 lakh, the bank is offering fixed rate of interest of 10% for two years to units covered by CGTMSE.
As per information provided by officials besides home loans, the bank will probably extend the deadline for auto loans and for warehouse-based receipts loans from May to September. However these schemes, are offering auto loans at 10% for one year and ware house based receipt loans at 8%, and were announced on February 20. According to banking analysts lower-than-expected response from borrowers may have resulted in SBI extending its loan schemes.
At present the demand for home loans is very low because buyers are waiting for property prices to fall before they can avail of the reduced interest scheme. Moreover Canara Bank's decision to offer a fixed rate of 8.25% on home loans up to December '09 might have also impelled SBI to extend its own scheme till September '09.
Recently, PSBs have been under intense media glare for failing to reduce their benchmark prime lending rates (PLR) to the same extent that key policy rates have been systematically brought down to encourage bank lending. In fact , PSBs say that over three-fourth of their disbursals are at sub-PLR levels and when they will reduce the PLR they will be forced to reduce interest rates further on loans that are linked to the prime rate such as on farm loans. Therefore they say this can affect their profitability.
Tuesday, March 31, 2009
SBI announced financing details for Nano, will charge 10% interest on loans
Finally Tata Nano was launched yesterday and keeping to his promise Mr Tata told that the company will offer Rs l lac price for the initial 1 lac customers only because the prices to the related products have increased therefore he will be revising the price of the car for the later customers.
Hence a majority of Tata Nano customers will have to pay more interest payments on the steep booking amount over the next one year. The reason being the Tata Motors will be able to deliver only 50,000-60,000 cars during 2009-10, though the company plans to accept 100,000 applications.
Therefore every customer who books the base version which will cost around Rs 112,000-123,000 from the State Bank of India (SBI), the preferred lenders will have to make an upfront payment of Rs 2,999 as interest charge according to the calculation made at the rate of 10 per cent, and processing fee. Moreover on any further delay in delivery the customer will have to pay additional interest payment at the same rate.
While for the later models the customers will have to pay around Rs 3,300 and Rs 3,900.
Customers who are not willing to avail finance from banks will only have to pay the application fee of Rs 300.
SBI, the sole booking agent for the Nano, has announced its financing details, while most other banks —public, private and non-banking finance companies (NBFCs) — will be revealing their plans over the next few days. It is believed that most of the public sector banks will be keeping the lower interest rate on the advance booking amount than the existing car loan rates.
SBI while announcing its financial details said it will be finance the entire booking amount of the Nano for which for a period of three months the applicant will have to pay an interest rate of about 10 per cent upfront. For the introducing model, customers will have to make a down payment of Rs 95,000. Therefore advance booking amount for the Tata Nano CX will be Rs 120,000 and for the top-end model the booking amount will be Rs 143,000.
Individuals are free to either pay the entire booking amount by themselves or can get finance.
In case there is delay of beyond 90 days in the allotment, Tata Motors will have to pay an interest rate of 8.5 per cent for one year to two years and 8.75 per cent for a period of more than two years.
At the time of allotment of the car, the loan will be converted into a regular car loan in which the interest rate is 11.75 to 12 per cent in case of SBI, with a maximum repayment period of seven years. A senior bank official informant SBI will be taking in consideration the minimum income and other KYC (know-your-customer) requirements before sanctioning the loan.
The customers can obtain applications forms from at over 30,000 locations in about 1,000 cities through Tata Motors passenger’s car dealerships, SBI and its branches, its subsidiaries and associates, other preferred financiers and outlets of Westside, Croma, World of Titan and Tata Indicom exclusive stores.
Friday, March 6, 2009
SBI first CAB set up in Lucknow
India's largest lender State Bank of India (SBI) on Wednesday launched its first kind of Currency Administration Branch (CAB), which will exclusively handle currency notes.
CAB also known as cash factory, is part of the bank's proposal to open one currency chest in every city which will disburse notes and rupee coins to the local banks and ATMs, besides from identifying counterfeit currencies.
SBI (Lucknow circle) chief general manager Shiv Kumar explained, "The cash factory will be the nodal point for issuing currency notes to all local SBI branches as well as ATMs. About half a dozen sophisticated notes sorting machines will sort out currency notes in four varieties in the branch office".
Kumar explained the first range currency notes will be fed into ATMs. The second range, known as re-issuable notes, will be reserved for customer transactions, while the third one, non-issuable, will be sent back to the Reserve Bank of India.
He added the mutilated and bad notes identified by machines will come under the fourth range and will be scrutinized manually.
Kumar informed the next cash factory will be set up in Kanpur.
He added, "The new arrangements are aimed at a more efficient and cost-effective centralized currency administration system instead of having multiple currency chests in a centre as prevalent today".
For the SBI branches, supervising the chests along with routine functions is an additional work. Officials stated by setting up of the cash factory it would be great help in better management of currency notes with fewer infrastructures.
They said that the CAB will also help in boosting the fight against fake currency in Uttar Pradesh, which is becoming a hub for counterfeit currency notes being allegedly smuggled across the absorbent and largely unguarded border with Nepal.
Last year in August, a Reserve Bank of India team had discovered counterfeit currency amounting to over Rs.5 million (Rs.50 lakh) from the currency chest of the State Bank of India's Domariaganj branch in Siddharthnagar district.
Then, the bank's chief cashier was arrested and a large amount of both genuine and fake currency notes were recovered from his house.
Wednesday, February 18, 2009
SBI chairman reassured margins to remain unaffected by cut in home loan rate
O P Bhatt State Bank of India’s chairman has reassured analysts that the bank decision of cutting home loan rates to 8% will not affect the margins. He also indicated that the bank will raise capital but the process for this will be done only after the elections.
Addressing the chief investment officers (CIO) of top fund houses in Mumbai on Wednesday, Mr Bhatt pointed out that the bank is considering adding nearly 1 lakh new customers to its existing base by offering the special home loans offer. This will also make possible for them to cross-sell other products to these customers, which in turn will result in additional revenues as well as savings by way of lower marketing costs.
Explaining about the 8% offer, Mr Bhatt notified the decision is also motivated by the fact that the bank invests a significant amount of surplus cash in the repo market where returns are only 4%. Therefore by redirecting this money as loans to home buyers, the SBI will be able to make twice that rate of interest. Mr Bhatt notify the CIOs that even if a part of surplus cash — one which they receive 4% — is forward as loans to home buyers; it will in turn boost margins.
However by the quarter ended December 3008 SBI net interest margin (NIM) improved to 3.15% from 3.01% in the corresponding period last year. Mr Bhatt notified analysts that he is expecting real estate sector to stimulate with SBI’s 8% scheme. As per the report of Antique Stock Broking, Mr Bhatt acknowledged that there are ownership issues with respect to maintaining the government share while raising capital. The report also stated, “Besides, political will of the new government would also be considered”.
As per the report Mr Bhatt, is expecting NPAs to rise gradually. NPAs might even double in case the economy continues to remain under stress, but he warned that it will not touch the 90 level like the earlier. The report also citied Mr Bhatt as saying that NPAs will rise in the short term due to provisioning norms, but will return to standard assets when the economy starts improving. He even anticipates negligence in export-oriented sectors like textile, gems and jewellery, auto components and IT sector.
The SBI chairman revealed that high-cost deposits comprise about 25-30% of the total assets and are for shorter duration. As these bulk deposits get revalued, the cost for the SBI will come down. However he stated that in the short run, the bank might feel some pressure on its NIM as it raised term deposits for three years whereas the impact of the cut in lending rate will be visible on the entire portfolio.
Addressing the chief investment officers (CIO) of top fund houses in Mumbai on Wednesday, Mr Bhatt pointed out that the bank is considering adding nearly 1 lakh new customers to its existing base by offering the special home loans offer. This will also make possible for them to cross-sell other products to these customers, which in turn will result in additional revenues as well as savings by way of lower marketing costs.
Explaining about the 8% offer, Mr Bhatt notified the decision is also motivated by the fact that the bank invests a significant amount of surplus cash in the repo market where returns are only 4%. Therefore by redirecting this money as loans to home buyers, the SBI will be able to make twice that rate of interest. Mr Bhatt notify the CIOs that even if a part of surplus cash — one which they receive 4% — is forward as loans to home buyers; it will in turn boost margins.
However by the quarter ended December 3008 SBI net interest margin (NIM) improved to 3.15% from 3.01% in the corresponding period last year. Mr Bhatt notified analysts that he is expecting real estate sector to stimulate with SBI’s 8% scheme. As per the report of Antique Stock Broking, Mr Bhatt acknowledged that there are ownership issues with respect to maintaining the government share while raising capital. The report also stated, “Besides, political will of the new government would also be considered”.
As per the report Mr Bhatt, is expecting NPAs to rise gradually. NPAs might even double in case the economy continues to remain under stress, but he warned that it will not touch the 90 level like the earlier. The report also citied Mr Bhatt as saying that NPAs will rise in the short term due to provisioning norms, but will return to standard assets when the economy starts improving. He even anticipates negligence in export-oriented sectors like textile, gems and jewellery, auto components and IT sector.
The SBI chairman revealed that high-cost deposits comprise about 25-30% of the total assets and are for shorter duration. As these bulk deposits get revalued, the cost for the SBI will come down. However he stated that in the short run, the bank might feel some pressure on its NIM as it raised term deposits for three years whereas the impact of the cut in lending rate will be visible on the entire portfolio.
Tuesday, February 17, 2009
SBI announce freeze on rates on new home loans for 1 year
On Saturday State Bank of India (SBI) country’s largest public sector bank has announced freeze on interest rates on new home loans at eight per cent for one year.
But for its existing customers, a new scheme SBI Lifestyle Loan has been initiated under which customers will be able to avail eight per cent interest rate for one year.
As per SBI release this facility will be available to the amount of 10 per cent of their home loans but up to a maximum of Rs. 5 lakh.
The release also added the new scheme of eight per cent interest rate will be applicable for loans taken during February 2 and April 30.
The release stated the bank would be resetting the interest rate after the freeze period to the same rate as originally applicable under the respective schemes.
The existing borrowers of the bank under the two home loan schemes — loans up to Rs. 5 lakh and Rs. 5-20-lakh range — will also be offered at eight per cent for one year.
The release said at this point after the freeze period the originally constricted rate will be applicable.
In the release bank’s newly launched packages for SME borrowers —SME Care — were also mentioned under which an additional working capital facility of 20 per cent of the fund based limits to customers will be offered.
The release stated, “The loan will be given to take care of inventories of raw materials, finished goods as also delayed payments from their buyers in the current downturn at an interest rate of 8 per cent”. The repayment tenor of the loan will be one year.
The bank added in addition to this bank has also introduced SME Help, under this term loans will be given to purchase fixed assets including generator sets with concessionary interest rate of eight per cent for the first year.
The release stated after the first year, the applicable rate will be charged for the loans.
But for its existing customers, a new scheme SBI Lifestyle Loan has been initiated under which customers will be able to avail eight per cent interest rate for one year.
As per SBI release this facility will be available to the amount of 10 per cent of their home loans but up to a maximum of Rs. 5 lakh.
The release also added the new scheme of eight per cent interest rate will be applicable for loans taken during February 2 and April 30.
The release stated the bank would be resetting the interest rate after the freeze period to the same rate as originally applicable under the respective schemes.
The existing borrowers of the bank under the two home loan schemes — loans up to Rs. 5 lakh and Rs. 5-20-lakh range — will also be offered at eight per cent for one year.
The release said at this point after the freeze period the originally constricted rate will be applicable.
In the release bank’s newly launched packages for SME borrowers —SME Care — were also mentioned under which an additional working capital facility of 20 per cent of the fund based limits to customers will be offered.
The release stated, “The loan will be given to take care of inventories of raw materials, finished goods as also delayed payments from their buyers in the current downturn at an interest rate of 8 per cent”. The repayment tenor of the loan will be one year.
The bank added in addition to this bank has also introduced SME Help, under this term loans will be given to purchase fixed assets including generator sets with concessionary interest rate of eight per cent for the first year.
The release stated after the first year, the applicable rate will be charged for the loans.
Tuesday, February 10, 2009
SBI awarded 2 IBA Award
State Bank of
SBI is having a network of 4261 rural branches in Rural Banking Initiative, which is a astounding 38% of its network. All these branches including diverse geographical terrains- some in the hilly and mountain raven regions like Leh at an altitude of 13000 feet above the sea level are on Wide Area Networking Platform. One of the Bank's aims is to offer service even in the remotest part of the country. In alliance with this acknowledged objective, the Bank is setting up another 1000 new branches in rural and semi-urban areas before March 2009.
In IT Architecture, State Bank of India (SBI) which is largest premier financial institution in India having a network of 11,500 branches and an additional 4600 branches of its associate banks spread across India has upgraded its IT Architecture by getting on an ambitious Core Banking System (CBS) implementation with an aim of connecting all the branches that will serve to 150 million plus accounts with a daily transaction volume of 25 million plus transaction per day. The environmental friendly feature of SBI's CBS architecture has allowed flawless edge with other IT initiatives like ATM, Internet Banking (both retail and corporate), Payment Systems (NEFT, RTGS, SWIFT, ECS, and EDI), Government Business, Financial inclusion, Treasury and Foreign Exchange
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