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.
Tuesday, July 7, 2009
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.
Tuesday, June 16, 2009
SBI aims to be among top ten banks in the world
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.
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.
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.
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