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 Meanwhile Axis Bank has withdrawn the similar scheme after RBI has shown its concern over these schemes.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.
Wednesday, February 17, 2010
Monday, January 18, 2010
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.
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.
Wednesday, January 6, 2010
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.
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.
Monday, December 7, 2009
Govt approves SBI acquisition of State Bank of Indore
The acquiring process of State Bank of Indore by its parent bank State Bank of India has got the approval of Indian government. This was informed by the junior finance minister to the lawmakers.
Earlier SBI, country’s largest lender had acquired one of its subsidiaries - State Bank of Saurashtra. There are six other associate banks and SBI plans to acquire all the associates eventually. Namo Narain Meena told the lower house of parliament in a written reply, "SBI has already initiated the process".
State Bank of Indore on Oct 31 had informed the Bombay Stock Exchange that its board as given its approval to the acquisition of the bank by SBI, including a share exchange ratio proposed allotment of 34 equity shares of SBI in view of every 100 equity shares of State Bank of Indore.
The minister informed but bank employees’ unions have expressed their concern over the proposed acquisition in the banking sector, especially the state-run banks. He stated, "Some of the apprehensions are closing of bank branches, retrenchment of existing employees, regional sentiments about some particular banks, etc".
He also informed that government has not given "direction to any specific bank to consider proposal for merger or amalgamation with a particular bank." The proposal for acquisition has to be taken up by the managements of the banks and government will just play a role of supporter, as the common stakeholder.
Earlier SBI, country’s largest lender had acquired one of its subsidiaries - State Bank of Saurashtra. There are six other associate banks and SBI plans to acquire all the associates eventually. Namo Narain Meena told the lower house of parliament in a written reply, "SBI has already initiated the process".
State Bank of Indore on Oct 31 had informed the Bombay Stock Exchange that its board as given its approval to the acquisition of the bank by SBI, including a share exchange ratio proposed allotment of 34 equity shares of SBI in view of every 100 equity shares of State Bank of Indore.
The minister informed but bank employees’ unions have expressed their concern over the proposed acquisition in the banking sector, especially the state-run banks. He stated, "Some of the apprehensions are closing of bank branches, retrenchment of existing employees, regional sentiments about some particular banks, etc".
He also informed that government has not given "direction to any specific bank to consider proposal for merger or amalgamation with a particular bank." The proposal for acquisition has to be taken up by the managements of the banks and government will just play a role of supporter, as the common stakeholder.
Monday, November 23, 2009
SBI General Insurance & IAG include JWT India and Interpub in its list
State Bank of India, India’s largest lender in a tie up with Insurance Australia Group (IAG) has set up a joint venture, SBI General Insurance. Recently the duo completed the initiated creative pitch process following the company has appointed two JWT India and Interpub to its list. The amount size is in the range of Rs 8-10 crore.
The SBI General Insurance officials declined to comment on the development and the agency officials were also not available for comments. Sources closely related to the development have confirmed the two agencies are already part of the SBI General Insurance list.
In the joint venture SBI holds a major stake of 74 per cent and IAG holds the remaining stake of 26 per cent. IAG is an international general insurance group carrying out operations in Australia, New Zealand, Thailand, Malaysia, China and the UK through various brands.
Thus SBI entry into the general insurance segment with a bunch of financial products has completed the financial services areas. However bank, through its subsidiary SBI Life Insurance Company of India is already offering life insurance products.
The SBI General Insurance officials declined to comment on the development and the agency officials were also not available for comments. Sources closely related to the development have confirmed the two agencies are already part of the SBI General Insurance list.
In the joint venture SBI holds a major stake of 74 per cent and IAG holds the remaining stake of 26 per cent. IAG is an international general insurance group carrying out operations in Australia, New Zealand, Thailand, Malaysia, China and the UK through various brands.
Thus SBI entry into the general insurance segment with a bunch of financial products has completed the financial services areas. However bank, through its subsidiary SBI Life Insurance Company of India is already offering life insurance products.
Friday, November 6, 2009
Banks union threatens to go on strike in protest to State Bank of Indore- SBI merger
Although the merger of State Bank of Indore with State Bank of India (SBI) had got green signal but the All India Bank Employees’ Association (AIBEA) is against this merger, thus in protest of this merger AIBEA has proposed to go on a one-day strike by November-end. According to union the merger is a “violation” against the agreement, and if the merger is pursued then it might think of going on an indefinite strike.
The union took decision to go on strike after SBI submitted a copy of ‘Scheme of Acquisition of State Bank of Indore by SBI’ to the Bombay Stock Exchange.
CH Venkatachalam, general secretary, AIBEA told Business Standard, earlier in June, this year the labour minister had held meeting with the bank management in which it was told not to go ahead with the merger, both the management and the union representatives agreed on this.
Venkatachalam added, “It’s clearly a violation by the SBI management, we have decided to go on a one-day strike by the end of this month against the decision”.
The union representatives will be meeting on Thursday or Friday to finalize the date of strike.
“I am not ruling out an indefinite strike,” he added.
He informed the bank (State Bank of Indore) is doing good business, even better than SBI, so why to go for merger? As State Bank of Indore provides support to the regional development projects, so, Venkatachalam feels if the bank is merged, then it will loose capability of supporting regional development.
He told comparatively the business per employee at State Bank of Indore is Rs 7.01 crore, while SBI figures stand to Rs 5.56 crore only. Likewise the advances per employee for State Bank of Indore accounts to Rs 3.43 crore as against Rs 2.63 crore for SBI, whereas deposits per employee of the former figures to Rs 4.50 crore against Rs 3.40 crore for the latter, and also in the priority sector lending it is 34 per cent for State Bank of Indore as against 26 per cent for SBI.
The union took decision to go on strike after SBI submitted a copy of ‘Scheme of Acquisition of State Bank of Indore by SBI’ to the Bombay Stock Exchange.
CH Venkatachalam, general secretary, AIBEA told Business Standard, earlier in June, this year the labour minister had held meeting with the bank management in which it was told not to go ahead with the merger, both the management and the union representatives agreed on this.
Venkatachalam added, “It’s clearly a violation by the SBI management, we have decided to go on a one-day strike by the end of this month against the decision”.
The union representatives will be meeting on Thursday or Friday to finalize the date of strike.
“I am not ruling out an indefinite strike,” he added.
He informed the bank (State Bank of Indore) is doing good business, even better than SBI, so why to go for merger? As State Bank of Indore provides support to the regional development projects, so, Venkatachalam feels if the bank is merged, then it will loose capability of supporting regional development.
He told comparatively the business per employee at State Bank of Indore is Rs 7.01 crore, while SBI figures stand to Rs 5.56 crore only. Likewise the advances per employee for State Bank of Indore accounts to Rs 3.43 crore as against Rs 2.63 crore for SBI, whereas deposits per employee of the former figures to Rs 4.50 crore against Rs 3.40 crore for the latter, and also in the priority sector lending it is 34 per cent for State Bank of Indore as against 26 per cent for SBI.
Wednesday, October 21, 2009
SBI - State Bank of Indore merger gets approval from govt
The State Bank of India (SBI) and State Bank of Indore merger have been finally approved by the government. A senior finance ministry official informed that the government has given an in-principal approval to the merger.
The official informed, “The boards of both the banks will now work out the modalities of the merger, and come to the government for final approval. We expect the merger to be completed by December”.
The official added that State Bank of India is not planning any more mergers of its subsidiaries with self. Last year in August SBI had merged State Bank of Saurashtra with self.
At present country’s largest commercial bank is having five other associate banks- State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Hyderabad.
The official informed, “The boards of both the banks will now work out the modalities of the merger, and come to the government for final approval. We expect the merger to be completed by December”.
The official added that State Bank of India is not planning any more mergers of its subsidiaries with self. Last year in August SBI had merged State Bank of Saurashtra with self.
At present country’s largest commercial bank is having five other associate banks- State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Hyderabad.
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