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.
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.
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