SBI dissatisfied with RBI's views on teaser loans

The Chairman of State Bank of India the largest lender in the country Mr. O P Bhatt expressed his views regarding the reluctance shown by the Reserve Bank of India towards the teaser home loan scheme from SBI.

“The RBI hasn’t understood our product. SBI does its homework properly and gives loans to eligible borrowers who can pay back the loans whereas in US, banks had given home loans to people who even didn’t have incomes and jobs,” he said.

The teaser loan scheme has gained a lot of popularity amongst the masses and has attracted a lot of first time borrowers primarily due to the flexible nature of the scheme. However, the recent hike in the lending rates has definitely brought a dip in the demand.

Mr. Bhatt made it clear that the lender has always followed the guidelines very diligently. “We might have committed mistakes sometimes but it has never happened where we haven’t complied with the local regulations anywhere we operate,” he said.

SBI firm about keeping teaser loans

State Bank of India made it clear that it is not going to step down from the teaser rate home loans scheme.

In teaser loans scheme, initially the borrower pays EMI at very low interest rate that increases eventually after a few years.

The head of the largest lender of the country State Bank of India, Mr Om Prakash Bhatt said "Every quarter we look at the data. It is data-based. If it's good, then I would extend it. The NPAs on my loans are the lowest and I also have the collateral of the customer's house."

Mr Bhatt believes that the teaser loan scheme has primarily benefited the common middle class families of the country. He said "About 2.92 lakh people have got loans. Where is the tease in the product? There is no risk and there is no opacity. There is no dilution of loan appraisal norms or documentation. Every Indian is eligible."

10 days vigilance leave for SBI employees

Some of the employees of State Bank of India might find it as very refreshing news but for some it is going to be as bad as a bad dream. The State Bank of India has instructed all the employees of the bank to go for a 10 day compulsive leave during a year that would also be known as preventive vigilance leave, a very common trend followed by MNCs.

During a study it was found that a lot of the employees that have established a very good reputation for their regularity and sincerity for work were found to be indulged in some kind of fraud. Such employees tend to use their good reputation and good relationship with the customers to commit a well planned fraud.

The employees that do not utilize the leaves earned by them are probable suspects as they want to keep their wrongdoings a secret and in due course of time such employees converts the fraud money into real money by corrupting the record.

The State Bank of India took this step in order to strengthen their internal processes and to keep check on scams.Some of the State Bank employees might find it as very refreshing news but for some it is going to be as bad as a bad dream. The State Bank of India has instructed all the employees of the bank to go for a 10 day compulsive leave during a year that would also be known as preventive vigilance leave, a very common trend followed by MNC Banks.

During a study it was found that a lot of the employees that have established a very good reputation for their regularity and sincerity for work were found to be indulged in some kind of fraud. Such employees tend to use their good reputation and good relationship with the customers to commit a well planned fraud.

The employees that do not utilize the leaves earned by them are probable suspects as they want to keep their wrongdoings a secret and in due course of time such employees converts the fraud money into real money by corrupting the record.

The State Bank of India took this step in order to strengthen their internal processes and to keep check on scams.

“Bank on Bike”: another creative move from SBI

State Bank of India has come up with another creative move to make the Financial Inclusion Plan a success . The bank has launched a new project known as “ Bank on Bike” at Cheriyal in Medak on pilot basis for a period of one month.

Through this service the bank plans to benefit the customers in the unbanked areas of the district. If the project proves to be a success then the bank has planned to expand this service further to 400 villages by March this year.

For the purpose the bank has appointed Business Correspondents, these correspondents would carry laptops and a data card to access the SBI site. It is based on biometric system to avoid any kind of fraud and due to this, even illiterate people will be able to access their bank account safely.

According to the official this project aims at providing the banking facilities to the people that are in unbanked areas with less cost and within short time span.

SBI working on next overseas venture

In a bid to expand globally State Bank of India has announced that it is in final stage of dealings to open a bank office in Doha. State bank of India is the largest bank in India and is ranked 8^th in Asia.

A senior official informed that "The talks and procedures for setting up of a wholesale banking unit in Doha are in the final stages,”

Opening a branch in Doha is very critical step to tap business opportunities in the gulf region. The bank further plans to expand the network in the country as well as in the Gulf region.

The bank officials believes strongly that the country has a lot of potential and the bank expects that the Doha branch will start registering profits by the end of the first year of operations.

The bank is presently ranked 62^nd globally. The overseas profit earned by the bank is around 16 percent of the total business by the bank. The bank aims to increase the overseas business share in the total profit to 25 percent.

The services would include collecting large commercial deposits and making big loans to high net worth corporates and individuals, offering bank guarantees, counter-guarantees, Lines of Credit among others. The bank also plans to offer investment and retail banking services to tap into the presence of a large number of Indian and Asian business entities and expatriates in Qatar.

The bank presently have 152 branches in 32 countries and plans to increase the total number of overseas offices of the banks to 1,000 in next couple of years.

State bank of India to open new branches in China

The largest public sector bank of in India, State bank of India is planning to open a representative office in Guangzhou (China). The bank already has a branch in Shanghai and representative office in Tianjin .The bank has however planned to upgrade the representative office to a branch.

It can be noted that already a few Indian banks have their branches in China. Allahabad bank, a state owned Kolkata based bank has also announced extending it’s branch network in China recently.

“A foreign bank can approach the China Banking Regulatory Commission for upgrading a rep office to a branch upon completion of two years of operations,” said a bank official.

A foreign bank in China can take upto 5 years to turn into profit , a senior public sector official pointed that the bank has to be prepared for a long haul there.

Bhatt says, SBI has no immediate plans to revise prevailing interest rates

India's largest public sector bank, State Bank of India (SBI) has no immediate plans to revise its fixed deposit and lending rates. SBI Chairman, OP Bhatt told reporters, "I don't see any possibility of immediate change in our any rate." He added, "This possibility may occur after three-six months depending upon any change in the economic condition."

However, after the Reserve Bank of India raised repo and reverse repo rates fifth time the banks have said the hike in lending and deposit rates will be done in October.

Bhatt, without taking the name of SBI predicts the base rate may increase by 25 points which will result in increase in the interest rate of loans which are directly associated with the base rate, but all will depend on the economic condition.

As per new RBI guidelines, the banks have set their base rates and they cannot lend below that rate. Regarding raising Rs20,000 crore from the market through rights issue, he said, "we are talking to the government on the issue and I hope that our right issue will get the government's nod in the current financial year only."

In reply of prospects of SBI’s business in 2010-11 in view of the erratic monsoon season, he said, "though monsoon was not good in states like Orissa, Jharkhand and West Bengal, I hope that still we will register a growth of 20 per cent in the current financial year."