Friday, August 31, 2012

RBI asks banks to post bulk deposit rates on website

Mumbai, August 30: The Reserve Bank of India (RBI) has asked banks to put up bulk deposit rate on their websites, to stop banks from offering exorbitant rates to corporate depositors. According to RBI norms, no bank can offer varying rates on the same day at different locations.
According to bankers, some of the banks are offering as much as 200 basis points higher than the card rate to their corporate clients. Bulk deposits are corporate deposits that are generally Rs 1 crore and above with maturity of up to one year.
The central bank’s directive comes following the finance ministry’s effort to discourage banks’ rush for bulk and certificates of deposit, which are of high cost and adversely impact margins. The ministry had asked banks to cut down their proportion of high cost deposits (bulk deposit and certificates of deposit) to 15 per cent, with a cap of 10 per cent on bulk deposits.
About 25-30 per cent of the deposits of public sector banks are bulk in nature. The central bank and the finance ministry’s concern over exorbitant bulk deposit rate comes on the back of banks scrambling for funds during the end of the previous financial year. In March, bulk deposit rate crossed 12 per cent, higher by 100 basis points in a month. As a result, deposit growth in March swelled by Rs 3 lakh crore — one third of the deposits garnered in 2011-12.
The finance ministry and RBI had also asked the public sector banks not to bid for bulk deposits. Earlier this week, Mumbai-based public sector lender Bank of India reduced the rate on interests on bulk deposits in some tenors by 25-50 basis points.

Public Sector Banks, including SBI set out on a talent drive

 "Public sector banks in the country face a tremendous 
challenge with respect to talent and leadership skill availability.
Estimates put the manpower shortfall at four to five lakh."
Bangalore & Kolkata, August 30: Public sector banks (PSBs) including Punjab National Bank, IDBI, State Bank of India and Bank of India are altering their talent strategies to focus on performance and employee engagement. The banks are also lining up incentives such as paid holidays abroad, leadership and training programmes at top b-schools.
"Public sector banks in the country face a tremendous challenge with respect to talent and leadership skill availability. Estimates put the manpower shortfall at four to five lakh," said Padmaja Alaganandan, executive director - consulting at PwC Consulting. Bridging the shortfall requires focus on fast-tracking high potential talent, she added.
The increased focus on performance has resulted in top business schools like IIMs witnessing an increase in executive management programmes taken up by banks to understand leadership, strategy, customer orientation and employee engagement. "Although the numbers of PSBs (around 2 per cent) are small when compared to other sectors, we have seen a more active interest in open programme participation this year," says Alex Manappurathu, chief programme officer (executive education), IIM-Bangalore.
At IIM-Bangalore, SBI, Bank of India, State Bank of Travancore, Canara Bank, Andhra Bank, Syndicate Bank, Karnataka Bank are among the public sector banks that have participated in open/custom programmes in the last three years, catering to the GMs and DGMs.
SBI has effected a complete overhaul of its talent assessment and engagement programmes. There is a new appraisal system. Senior managers will now have a performance review twice a year. The bank has tied up with Harvard Business School for online training programmes for its senior management. "We are now recruiting aggressively. These engagement methods will help us retain our employees and get more to join us," said a senior SBI HR executive who did not wish to be named.
Another bank that plans to provide global exposure to its employees is Punjab National Bank that has tied up with a business School in Singapore to train their middle and senior management on leadership skills. Last year, the bank started a grievance portal for employees called "Samadhaan" through which an employee can mail problems related to promotions, or managerial hiccups to the chairman directly.
"For junior and middle management, our salaries match the private banks and our attrition is not high," said Sushma Bali, GM-HR for PNB. Nonetheless, the bank is overhauling its employee engagement and performance management processes.

SBI to cut processing and conversion fees on home loans

With the advent of festival season India’s largest lender – SBI has embarked upon a special campaign to ramp up its home loan book. It is going to reduce the processing fee for home loans to Rs.1,000 per loan irrespective of the size. The offer would be made available from September 1 onwards, a senior bank official told.
With the advent of festival season India's largest lender - the State Bank of India (SBI) has embarked upon a special campaign to ramp up its home loan book. It is going to reduce the processing fee for home loans to Rs.1000 per loan irrespective of the size. The offer would be made available from September 01 onwards, a senior bank official told.
Currently, loan processing is at 0.25% of the loan amount subject to a cap of Rs 6,500 for loans upto Rs.75 lakhs. For any higher loan amount, the maximum fee ceiling is Rs.10,000.  For example, if you apply for a loan of Rs. 20 lakhs, you need to pay a processing charge of Rs.1000/- With the new offer, it will be uniform at Rs.1,000 for a home loan. However, the offer would end on 30th November, 2012.
At the same time, the banking behemoth is actively mulling reduction in conversion fee which is presently at 1%. For all banks, conversion fees are in the range of 0.50-2%. This move, if implemented, will help the existing (SBI) home loan customers, who are not entitled to get the benefit of reduced interest rates to avail of the lowered interest rates. Let’s assume the loan size is Rs.30 lakhs and a customer has already repaid Rs.10 lakhs. Therefore, he has to pay Rs.20,000/-(i.e. 1% of 30-10 lakhs) one-time upfront for the conversion.
Earlier, SBI cut the interest rates on home and auto loans by over 50 basis points, effective from August 07. However, it did not change the base rate (remains at 10% p.a), the benchmark rate below which the Reserve Bank of India does not allow any bank to lend. Now, a home loan borrower can avail of a home loan with interest at 10.25% as against 10.75% prior to the rate cut, for a ticket size of Rs 30 lakhs. The interest rate will be 10.40% for loans above Rs. 30 lakhs. The EMI on Home Loan tenor of 30 years is Rs.897 per lakh which is the lowest in the market.
However, the new rates are available only to the new customers. So, a customer who had taken a loan at a higher floating rate viz. 11.25% will be keen to avail the benefit of the current lower rate. So, he can convert his loan to the new rate by paying the conversion fee. "Those proposed moves by RBI will certainly benefit customers, who should tap opportunities right in time. However, the bank cannot just keep on doing this beyond a point as it may hurt their margins," said Anil Rego, CEO and founder, Rights Horizons, a Bangalore based advisory firm.
With 26% market share, SBI continues to be the leader in home loan market followed by the privately held housing finance company- HDFC.  "We have got some surplus funds after RBI cut statutory liquidity ratio by 1% to 23%. We have decided to utilize it in expanding our retail business. The Bank is aiming at 20-25% growth in its home loan portfolio. As the country's largest bank, we have a vital role to play in supporting the economy", said the official.
As of July, SBI's home loan portfolio stood at around Rs 1.06 lakh plus crores. Total retail loans stood at Rs 1.86 lakh crores in the April-June quarter. To facilitate home loan borrowers, it is planning to upload the list of housing projects, approved by the bank shortly.  The bank has tied up with 1,046 such projects across India till July in 2012-13. In order to enlist its projects, a builder has to meet certain norms prescribed by SBI. For listed projects, the bank sanctions home loans in 4-5 days while it takes around 14 days to approve a home loan for other housing constructions. The lender offers a loan to value (LTV) of 90% for home loans upto Rs 20 lakhs and upto 80% for loans above Rs 20 lakhs.

Thursday, August 30, 2012

Seek more time to repay corporate loans: SBI

Kolkata, August 29: “The other day, we received a (loan) proposal for setting up a hotel, with a repayment period of eight to nine years. I told my officers ask this gentleman to take the loan for 12-13 years...Our advice is in the future, whenever you are applying for a loan, try to negotiate for a longer repayment tenure,” said Chairman Pratip Chaudhuri.

Such advice is aimed at capping a further rise in the bank’s restructured loan portfolio. In 2011-12, SBI’s restructured loan portfolio nearly doubled to Rs 8,093 crore from Rs 4,979 crore a year earlier. In the quarter ended June, the bank restructured loans worth Rs 564 crore. At the end of June, SBI’s total restructured loan portfolio stood at Rs 36,904 crore. Of these, loans worth Rs 7,373 crore were classified as non-performing assets. The Reserve Bank of India (RBI) has proposed tough norms for loan restructuring, and if the new rules are implemented, the provision burden on the bank would rise, eroding its profitability further.

Chaudhuri added SBI would not penalise its borrowers if they wanted to pre-pay loans ahead of the repayment schedule. “In the current scenario, with the rules RBI has proposed, it is difficult to increase the tenure after the loan is sanctioned. It would increase the burden on the bank. So, we are telling our customers to negotiate for more time. If one is able to repay ahead of the schedule, it is fine — there would be no penalty for pre-payment,” he said.

However, most banks were reluctant to agree. “The repayment period is based on the projected cash flow. The schedule is fixed after making a conservative assessment of the earnings, and taking into consideration the risk factor. We have no immediate plans to deviate from this practice,” said the chairman and managing director of a Mumbai-based public sector bank, requesting anonymity.

Wednesday, August 29, 2012

SBI officers protest against 7-day schedule

Lucknow, August 28: Officers of the State Bank of India held a demonstration in front of the bank's local head office on Tuesday to oppose the reported move of the bank's management for introducing seven-day banking in SBI.
Addressing the meeting, BK Awasthi, general secretary of State Bank of India Officers' Association said that in the present times when services of alternate channels like ATM, internet banking and mobile banking etc are available to customers, introduction of seven-day banking is not feasible. The move will not only adversely affect the staff of the bank but also drain out the valuable energy resource of the country.
He said that central government offices, secretariat and apex banks like RBI, Nabard etc are having 5-day week, where no difficulty is being experienced at their end. Besides employees' organisations in the banking industry are pleading for a 5-day week in the banking industry and the proposal is pending with the Indian Banks' Association, he added.

RBI to launch Rs 1,000 notes with Re symbol, more security

Mumbai, August 28: RBI today said it will soon launch Rs 1,000 denomination banknotes with rupee symbol, and improved security features. "The Reserve Bank of India will shortly issue Rs 1,000 denomination banknotes incorporating rupee symbol, with inset letter 'L', in both the numbering panels, in the Mahatma Gandhi Series-2005 with improved security features," RBI said in a notification.
These banknotes will bear the signature of RBI governor D Subbarao and the year of printing 2012 will be on the reverse of the banknote, it added. The design of these notes to be issued will be similar in all respects to the Rs 1,000 banknotes in Mahatma Gandhi Series-2005.
All the banknotes in the denomination of Rs 1,000 issued by the Bank (RBI) in the past will continue to be legal tender," RBI said.

SBI Card launches online application service 'Click2Card'

New Delhi, August 28:  SBI Card today launched online application service and aims to acquire about 3,000 customers through this initiative in next four months.  "Click2Card is another innovative service offering and is in line with our digital roadmap. This new platform will offer significant customer benefits, the primary being convenience," SBI Cards & Payment Services CEO Kadambi Narahari said here.
The company, which is the country's second largest credit card issuer and promoted by State Bank of India and GE Capital, aims to acquire 3,000 customers via online mode by December this year. The company, which has issued about 23 lakh cards aim to open 25,000 accounts next year through online mode, he said.
Last year, the company opened 4 lakh accounts through all distribution channels, he said, adding, SBI Card intends to add 5.6 lakh card in the current fiscal. Targeted at the Internet-savvy customers across India, who are increasingly transacting on the Internet, Narahari said, Click2Card allows customers to enter their details on a specially designed secure web interface.
The customer's application for a credit card is approved, declined or referred on the basis of the credit history with the credit bureau and the SBI Card risk and policy norms, he said. The customer has a real-time experience, and is updated on the status of his or her request instantly, he said, adding that for all approved or referred applications, the system sends back a soft approval (approval in principle) and the assigned credit limit. Subsequently, the customer is contacted by SBI Cards representatives to complete the documentation requirement. The documents and the information provided on the online platform need to match with those provided to the representative.

Chakrabarty had same views on CRR as a banker: SBI chief

Mumbai, August 28: State Bank of India Chairman Pratip Chaudhuri on Tuesday took a gentle dig at the Reserve Bank of India Deputy Governor K C Chakrabarty, who had advised him yesterday to “find out some other place” if he didn’t agree with the current regulatory environment insofar as cash reserve ratio was concerned.
Speaking on the sidelines of an investor conference on Tuesday, Chaudhuri said he hadn’t read the complete media reports, but what he remembered was that Chakrabarty had the same views when he was a banker.
“What I want to say is that it’s just a view. When he (Chakrabarty) was a bank chairman, he was also of the same view (reducing the CRR),” Chaudhuri said. He made the remarks with a big smile, but the message was loud and clear.
Before joining the central bank, Chakrabarty was the chairman and managing director of Punjab National Bank and before that, of Indian Bank.
However, while speaking to NewsWire 18, Chaudhuri clarified his intention was not a complete abolition of cash reserve ratio (CRR) overnight, but to ignite a public debate on the merits of CRR. “My comments are in sync with the views of most of the bankers today,” he said.
Chaudhuri had earlier suggested that CRR should be phased out in a time bound manner or at least RBI should consider a paying an interest on it equivalent to the savings bank account rate if not the repo or the reverse repo rate.
CRR is the proportion of deposits that banks need to park with the regulator. While RBI used to pay interest on CRR funds, but that system was withdrawn a few years back. As a result, banks do not earn anything for keeping CRR with RBI but the negative carry for CRR and also SLR (statutory liquidity ratio) is considered while calculating the benchmark lending rate — the Base rate.
At present, CRR is 4.75 per cent. The central bank had reduced CRR by 125 bps to improve liquidity situation during January-February. CRR is not only used a liquidity tool but also indicates the monetary policy stance of the central bank.

Capital infusion
Regarding fund raising, Chaudhuri said SBI was in talks with the government for capital infusion and he expected the government to infuse about Rs 4,000 crore this financial year in the bank.
The government is committed to infuse capital in the PSBs and retain its stake, financial services secretary D K Mittal had told reporters on a sidelines of an event last year in Mumbai. However the Rs 8,000 crore capital infusion for SBI came only at the end of the last financial year after from the government after dilly-dallying on the issue for the whole year.
Capital adequacy ratio for the SBI at the end of the first quarter stood at 13.17 per cent.
On associate banks’ merger, Chaudhuri said that it was currently not on the priority list of the bank and he could not say if any associate bank would be merged this financial year. The SBI board has already cleared the merger of one associate bank this year.

Tuesday, August 28, 2012

SBI chairman presses for abolition of CRR

Mumbai, August 27 (PTI) Making a strong case for abolition of cash reserve ratio, country's largest lender, the State Bank of India (SBI) chairman today said the banks were unable to use the resources more productively, which is lying with the central bank without any interest earning. Though CRR, the amount of capital that banks park with the RBI, doesn't pay any interest to banks, RBI views it as a cushion against any liquidity crisis in the system.
Earlier in the day, the deputy governor of RBI K C Chakrabarty had said that banks had to work in the regulatory environment of the country. "If the SBI chairman is not able to do business as per our regulatory environment, he has to find some other place," RBI Deputy Governor K C Chakrabarty said in a sharp reaction to Chaudhuri's recent comment that CRR does not help anybody and it was unfairly put on banks.
However, Pratip Chaudhari, chirman of SBI also defended his views on CRR saying that when the deputy governor was a bank chairman, he was asking for the same. Chaudhari also said that when the CRR rate was high and GDP was low, there was a strong inverse co- relationship. He also said if CRR is a inflation tool, then other sectors like insurance and NBFC should also have such norm.

RBI Dy. Governor's remarks on SBI chairman are in bad taste

The RBI deputy governor's reported remarks on the SBI chairman are in bad taste. The issue here is not whether the SBI chief has a point when he says that cash-reserve requirements on banks are an unfair imposition considering there is no such demand from insurance firms, non-banking financial companies and mutual funds.
The RBI deputy governor would have been well within his rights in disagreeing. Where he has gone overboard is in suggesting that the SBI chairman can work somewhere else if he does not like the RBI's regulatory framework.
A regulator, especially one like the RBI that prides itself on its independence, should have the tolerance to hear its decisions being questioned by stakeholders. Flying off the handle at any dissent is unwarranted.

Chakrabarty frowns at SBI chief’s views on CRR phase-out

Chennai, Aug. 27: The Reserve Bank of India Deputy Governor, K. C. Chakrabarty, came down heavily on State Bank of India Chairman Pratip Chaudhuri’s views seeking the phase out of the cash reserve ratio (CRR), saying either comply or do business elsewhere.
Responding to a question, on the sidelines of a financial conference on systemic risk organised here on Monday by the Great Lakes Institute of Management, Chakrabarty said banks must work within the framework prescribed by the regulator. “If the SBI Chairman is not able to do the business in this regulatory environment, he has to find out some other place,” he said.
CRR is the percentage of deposits commercial banks keep with the central bank.
Pratip Chaudhuri recently said that CRR does not help anybody. “When CRR is not applicable to insurance companies, non-banking finance companies and mutual funds that also mobilise funds from the public, it is an unfair imposition on banks,” he said to make a point that the CRR adds to the cost of doing business for banks.

SBI chief gets taste of RBI's tongue-lashing

Chennai, Aug 27: His predecessor, O P Bhatt, had spent the better part of his five-year tenure in a bitter war of words with the Reserve Bank of India over teaser home loans and sundry other things. State Bank of India Chairman Pratip Chaudhuri obviously didn’t want that to continue — so his first public statement after taking over in April last year focused on why SBI should not get into a state of perpetual conflict with the regulator.
Chaudhuri’s best efforts apparently have not been enough to soothe the RBI’s nerves and to stop it from seeing SBI as a problem child. A week after he suggested the abolition of the cash reserve ratio (CRR) — the proportion of deposits banks need to park with the regulator — RBI Deputy Governor K C Chakrabarty bluntly said on Monday — Chaudhuri “has to find some other place” if he could not work as per the central bank’s regulatory environment.
Chakrabarty was responding to a question from the audience at a conference on systemic risk here. The tongue-lashing took many by surprise, as it was probably the first time that a top RBI official resorted to such a public reprimand for the chairman of the country’s largest bank. Chaudhuri had said keeping the CRR balance with the RBI was costing the banking system Rs 21,000 crore. He had questioned why the CRR was not applied to insurance companies, non-banking financial companies and mutual funds, which were also mobilising public deposits. “CRR doesn't help anybody and it is unfairly put on the banks,” Chaudhuri had said.
While the RBI used to pay interest on CRR funds, that was withdrawn a few years back. Interestingly, SBI has reduced the lending rate on some segments such as retail and small and medium enterprises and said the reduction was due to a cut in the CRR and not due to a policy rate or repo rate cut. The RBI had reduced the repo rate in April by 50 bps to eight per cent.
Meanwhile, to another query as to “which banking tree needed to be protected”, Chakrabarty, drawing a forest fire analogy, said: “Obviously, it is SBI. It is too big a tree. If you fail to protect the SBI tree, it (the fire) may spread to other banks and it will turn out to be a systemic failure.”

Monday, August 27, 2012

Self-service banking gaining currency

Mumbai, August 26: Banks are increasingly launching self-service banking in the front lobby of their branches to increase customer convenience and reduce transaction time and costs.
Self-service banking in the front lobby of branches enables customers to use alternative banking channels — ATMs, phone banking, cheque deposit machine, and pass-book printer — without entering the branch, any time of the day, irrespective of whether the branch is open or closed.
The per transaction cost incurred on one customer in the physical branch is Rs 50 on an average, while e-banking costs about Rs 10 for a similar transaction.
Recently, ICICI Bank launched 25 electronic branches across 18 cities. The electronic branch, located within the brick and mortar branch, is a one-stop shop for all banking transactions. Among others, it has an interactive kiosk through which services can be accessed by swiping a debit card and provides video-conferencing with the bank’s customer care personnel.
One of the first banks to start the e-lobby facility is Mumbai-based Greater Bombay Cooperative Bank. It is offering all banking transactions to its customers through fully automated lobby banking.
Greater Bank has deployed a single machine called ‘MegaBanker’ in its lobby for 24x7 banking. Customers can use this machine, among others, to deposit cheque/cash (with real time credit to the account), withdraw cash, printing of savings and current account statements, and fake note detection. Currently, Greater Bank has lobby banking in 17 of its existing 21 branches.
Public sector lender Union Bank of India has launched ‘UnionXperience’ branches, where customers can use alternative banking channels any time of the day, irrespective of whether the branch is open or closed. It has implemented these services in 160 branches across 10 cities, with automation through self-service machines. “Today, more than 50 per cent of our transactions get done via e-banking. This saves time and costs for the bank,” said Lalit Sinha, General Manager, Alternate Delivery Channel, Union Bank of India.
A senior ICICI Bank official said the bank wants to expand its technology platform beyond ATMs and desktop devices to mobile and tablet devices.
Replenishment of cash in the ATM machines and infrastructure are major problems, Sinha said. “Indians are more comfortable with human interface and hence the customer adaptation to alternate channels is slow,” said Narendra Behere, CEO, Greater Bank.

Clerical cadre prone to higher attrition

Mangalore/Coimbatore, August 26: Banks put out impressive recruitment figures in their annual reports. But have you ever thought about the attrition rate in these banks? Shocking but true, in some cases, almost half of those who joined had left within a year.

The clerical cadre has been witnessing high attrition, especially in banks with a regional focus. Bank unions say the attrition rate is nearly 30 per cent in both the officer and clerical cadres.

D N Prakash, President of Corporation Bank Officers’ Organisation, said that the attrition level in the clerical cadre was as high as 45 per cent in a bank at one point of time.

Ask for the reasons, and you get several of them.

According to Prakash, some banks have branches only in particular geographical locations, unlike big public sector banks such as State Bank that have branches across the country. Some of the South-based banks have less presence in the northern region, but most of the new recruits in these banks are from the North. The banks find it difficult to place the new employees in States of their choice. This is one of the reasons why most of them don’t stick on for more than a year.

P R Karanth, Joint Secretary of AIBEA, says that someone who joins bank ‘A’ in the clerical cadre usually gets a good offer from bank ‘B’ in the officer cadre after two-three years. Even if the banks impose any bond during their appointment, they are ready to pay and leave.

To address this, K S Bhat, Secretary of the Syndicate Bank Staff Association, said that weightage should be given to those who work in bank ‘A’ while filling vacancies in the officer cadre.

He said a person from clerical cadre had passed IBPS with 167 marks in his bank. But the cut-off for officers’ cadre was 168 marks. But he got an officers job in bank ‘B’, where he matched the cut-off marks.

Some relaxation for the existing staff would have helped his bank to retain him. “In this process, we lost a clerical staffer and a person with two years’ experience,” he said.

Bhat said that in some States a lower division clerk in a government office gets a better salary than a bank clerk. Compared to banks, the workload and risks in some government offices are lower.

20% rise in fake notes in a year, says RBI

Mumbai, August 26: Fake notes are rising at an alarming rate. According to the RBI, the number of counterfeit notes detected in India jumped by 20% in the period between 2010-11 (435,607) and 2011-12 (521,155).
Total banknotes in circulation grew by 7% during the same period. But along with the problem, countermeasures have also increased. “Increased awareness among individuals and more note sorting machines in banks have led to detection of more fake notes,” said a senior Reserve Bank of India (RBI) official. Of the total counterfeits detected, 93% were in bank branches.
The number of note sorting machines, capable of detecting counterfeits, jumped from 4,000 at the end of April 2011 to 10,394 at the end of December 2011. RBI has advised banks to ensure that all notes received by them are processed on such machines before being re-issued.
Companies, too, are working on machines that will detect fake notes and the NCR Corporation is testing Bunch Note Accepting machines that function like ATMs, but have additional features of accepting cash from individuals and detecting counterfeits.

SBI management mulling working Sundays to improve efficiency

Mumbai: Country's largest lender State Bank of India may have its branches open on Sundays to help improve efficiency, a top bank official has said.
"Possibly we would like to see Sunday working which would increase the time available for doing banking and increase the business," bank chairman Pratip Chaudhuri told analysts on a conference call organised by the brokerage Edelweiss Securities.
The bank had last year taken everybody by surprise by opting to keep all its branches open on October 2 to compensate for a day's business loss due to a technical snag.
The bank management was happy with the foot falls and the staff turnout at the branches at that time in spite of it being a Sunday as well as a national holiday - Gandhi Jayanti.
Notably, many private banks, which control only a minority share in the banking operations, do keep their select branches open on Sundays for customer convenience, even though technologies like internet banking have reduced the need.
Being open on Sundays is said to help the branches attract the new-age working class customers where both the spouses in a household work and struggle to do banking transactions during the week.
SBI, which has almost 14,000 branches across the country, counts on its large chunk of savings account deposits (at over 38 percent) for higher margins.
However, if such a move were to be made, it would be interesting how the bank unions, which had crippled banking operations across country last week protesting reform measures, take to such a proposal.
SBI had carried out widely appreciated 'Parivartan' programme in early part of this decade, which helped it stay relevant in changing times and maintaining lead in the market.
During the call, Chaudhuri said the costs incurred on developing physical infrastructure and network does not hit the bank as much as staff costs.
In order to improve efficiency, it will therefore try to delegate routine responsibilities currently done by officers to the low cost junior employees, he said.

Friday, August 24, 2012

Rs 4,000-cr capital infusion on cards: SBI chief

State Bank of India expects Rs 4,000 crore capital infusion from the Union Government this fiscal. The bank will be discussing the matter with the Government this week, said Pratip Chaudhuri, Chairman, SBI.
The bank had earlier this year received close to Rs 8,000 crore from the Government.
“They (the Government) have called us for a meeting which should happen this week, and possibly another Rs 4,000 crore looks to be on the horizon,” he said.
As on June 30, 2012, the bank’s capital adequacy ratio stood at 13.17 per cent.
Non-performing assets
According to Chaudhuri, NPA (non-performing asset) concerns were slightly overplayed. “We should not see ghosts in NPAs,” he said, and added SBI has already taken several measures to bring down its NPAs.
“We are asking companies having non-core assets to sell them and bring the cash. If the company is short of capital, we are asking them to get some private equity or get equity investors, and if the company is asset free and cash poor, we are positioning more loans,” he said.
Recently, SBI appointed 20 credit appraisal experts from leading public sector companies to deal with the technical aspects of its new projects.

ICICI Bank launches 25 e-branches

Mumbai, August 23: Private sector lender ICICI Bank announced the launch of 25 electronic branches and other technology-based banking solutions here on Thursday. The 24x7 electronic branching facilities will offer cash and cheque deposit machines with instant credit, interactive kiosks with phone and internet banking services and video conferencing among others. The investment and cost-benefit-accruals relating to the initiative were not disclosed.
Other initiatives include ‘tab banking’ that allows opening an account on a tablet without visiting the bank branch and e-locker facility that helps customers to electronically save scanned copies of their important documents and other value-added services at the ATMs. Charges on the e-locker services will be decided on the basis of the usage of the customers.
At present, the 25 branches have been rolled out across 18 locations including metros and Tier II cities. “About a third of our customers are using Internet banking services....These services will be complimentary to our physical branches,” said MD and CEO, Chanda Kochhar, ICICI Bank. “Today, handheld devices like mobile phones and tablet segment is growing at over 100 per cent every year as compared to the 20 per cent growth in desktops. We want to expand our technology beyond ATMs and desktop devices,” Kochhar said.

SBI chief wants NPA rules tweaked

Kolkata, August 23: State Bank of India (SBI) chairman has called for a change in non-performing assets’ (NPAs) norms. “There is a need to change the norms relating to NPAs. We should not see a ghost in everything,” said Pratip Chaudhuri.
“For instance, a company has taken a two-year loan to install a machinery. If it fails to repay in two years, just because the repayment has been stretched beyond its original schedule, we should not consider it as an NPA. Nowhere in the world such a yardstick is applied. We need to see if the machinery equipment is sound and capable of generating good output.” The bank chief made these comments to reporters on the sidelines of a banking seminar organised by the Federation of Indian Chambers of Commerce and Industry.
The country’s largest commercial bank saw a surge in bad loans in the first three months of this financial year. The bank added close to Rs 7,500 crore of bad loans on a gross basis during the quarter, prompting investors to sell its shares. Its gross NPA ratio was at 4.99 per cent, while net NPA ratio was at 2.22 per cent at the end of June 2012.
Chaudhuri also said concerns over SBI’s credit quality was “largely overplayed” and the bank will see an improvement in the health of its assets from the July-September quarter. “Our quarterly profit was more than most public sector enterprises’ but our stock got a huge battering because of our NPA. We have done an analysis of the situation. NPAs are largely in the mid-corporate and SME sectors. But with a little consideration, a little understanding and stretching the repayment period, most of these accounts can be upgraded,” Chaudhuri said.
The chairman of the banking behemoth said there would soon be an improvement in the NPA numbers. “We accept the reality, but still, I think, NPA concerns are largely overplayed. In the next two to three quarters, our NPA management will be much better. Current trends do not indicate any increase in our NPAs. In fact, there could be a contraction in our NPAs in this quarter,” he added.
The bank has asked some of its borrowers to sell non-core assets to improve cash flow. If a company is short of capital, SBI is ensuring that the firm takes steps to strengthen its capital base. “If the company is asset-rich but cash-poor, we are positioning more loans to them,” said Chaudhuri. SBI has also appointed 20 senior executives from various public sector enterprises to review the technical aspects of industrial projects before sanctioning fresh loans against them.

SBI, BoI allowed to operate in Pak

India and Pakistan have agreed to allow two banks each from both the countries to set up branches across the border, Governor of the State Bank of Pakistan, Yaseen Anwar said on Wednesday.
“We have held discussions with the Reserve Bank of India and both sides have agreed to issue a full banking licence to two banks of each country,” Anwar told PTI on the sidelines of a conference organised by Institute of South Asian Studies.
The two Indian banks that will be allowed to operate in Pakistan are State Bank of India (SBI) and Bank of India (BoI). On the other hand, quasi-state owned National Bank of Pakistan and privately-owned United Bank Ltd will be running full-banking operations across the border, once licensed by India. “It will take few months to approve Indian banks’ licences on receiving them,” he said. “We are ready to go tomorrow to India” to set up banking operations, Anwar said.
Discussions have been held with RBI Governor D Subbarao to issue banking licences, he said, adding that the process will help normalise trade relations between India and Pakistan. Officials from the Bank of India in Singapore recently visited Karachi for setting up an office in Pakistan, said Syed Hasan Javed, Pakistan High Commissioner to Singapore.

Tuesday, August 21, 2012

About 10 lakh bank employees to go on strike on 22-23 August

New Delhi, August 21: Around 10 lakh bank employees and officers working in 27 public sector banks including State Bank of India (SBI) and 12 old generation private sector banks and eight foreign banks will resort to two days nationwide strike on 22nd and 23rd August, says United Forum of Bank Unions (UFBU). UFBU is the umbrella organisation of five employee unions and four officer unions of state-run banks in the country.
The Chief Labour Commissioner has called the bank union on 21st August for a conciliation meeting on strike notice, the statement added. The UFBU said it is against the proposed banking sector reforms, unilateral imposition of the Khandelwal committee report and want appointment on compassionate ground.
"The banking reform measures are retrograde but the government is still pursing the same and hence our protest," the statement said.
The Banking Laws Amendment Bill, 2011, which is before Parliament, contains provisions such as raising of shareholders' voting rights from 10% to 26% in private banks and suppression of bank boards.
There are about 87,000 branches of public sector banks across the country. The state-owned lenders control about 75% banking business.
UFBU is opposed to recommendations of the Khandelwal Committee which was appointed by Central Government to suggest changes in Human Resource policies in the banks. Here are the points raised by the UFBU...
  1. From 1950s, we have common wages and service conditions.  Now, this committee has recommended Bank specific wage structure based on profitability, productivity etc.
  2. All these years we have uniform wage and service conditions.  Now, the committee wants introduction of fixed and variable pay concept.  A portion of wage will be fixed and balance will vary according to performance.  This is impracticable in the banking sector and will result in division of employees and promote sycophancy.
  3. The committee has also recommended that settlements with unions on transfer of employees to be reviewed and to give free hand to the managements to transfer employees from place to place.
  4. The Committee has suggested 50% of officer vacancies should be filled directly from the market instead of promoting clerks.  This will seriously affect the career of employees.
  5. The report says that minimum qualification for appointing a clerk should be graduation.  All these years, matriculates are eligible to join the Banks.  Now, lakhs and lakhs of such unemployed youth will be deprived the opportunity.
  6. Similarly, so far, the qualification to join the banks as peon / class IV employee is 8th Standard failed.  The committee says that it should be matriculation.  This is also absurd.
  7. The Report says that Banks should not make any appointments in the urban areas but workload in the banks warrants the same.
  8. The committee has suggested outsourcing of all the regular bank jobs which is unfair labour practice.

"All these measures are anti-employee and anti-trade union and they are targeted to attack collective bargaining. Further overlooking the settlement the Government is giving unilateral guidelines on various service conditions. UFBU is opposed to such unilateralism," the bank unions have said.
UFBU would held massive rallies in all district places and cities across the country.  Nine unions, All India Bank Employees Association (AIBEA), All India Bank Officers Confederation (AIBOC), National Confederation Of Bank Employees (NCBE), All India Bank Officers Association (AIBOA), Bank Employees Federation Of India (BEFI), Indian National Bank Employees Federation (INBEF), Indian National Bank Officers Congress (INBOC), National Organisation Of Bank Workers (NOBW) and National Organisation Of Bank Officers (NOBO) have given the call for strike under the UBFU umbrella.

There is room for rate reduction: SBI chief

Citing State Bank of India’s example, finance minister P Chidambaram on Saturday prodded other banks to reduce EMIs to boost demand. The daily loan sanctions of the country’s largest lender have increased from 400 cars to 1,200 after EMIs were reduced from Rs 1,766 a lakh a month to Rs 1,699 a lakh a month.
Taking a cue from the minister, SBI chairman Pratip C Chaudhuri told TOI in an interview that there is scope for a further reduction in rates but the bank will be selective. Instead of an across-the-board reduction, SBI will look at sectors where lower EMIs would help push demand. Excerpts:
The FM used SBI’s example to ask other banks to reduce EMIs…
Our decision on consumer durables is the result of what the Reserve Bank has done. We decided that we will share the benefit of whatever excess SLR we are sitting on. Today, if you look at the loan demand from the corporate sector, there are very few projects that are taking off and investment is also low in power, steel or cement. As far as working capital is concerned, people are borrowing below the base rate, and they are borrowing through commercial paper. So, you can’t just push loans in this space. So, we have decided to focus on the retail side and try to push whatever demand is possible.

But why not home loans too?
In case of auto loans, the response is quicker. You sanction a loan today and the person purchases a car in two days. In case of home loans, it takes a while — if I sanction a loan today it will take a few months, if not more, for the entire amount to be disbursed.
Is there further room to reduce rates, even if it’s on the retail side?
Yes, there is room for reduction. We will reduce rates wherever there is the possibility of increasing demand. You look at the retail outlets, there is an immediate increase in demand whenever there is a discount. That’s been our experience too. We cut interest rates for SMEs and now we have done it for cars, where the demand has increased. The only way to improve sentiment is to get people to buy and get people to invest.
The FM also said that he will try to resolve problems related to environmental clearances and land acquisition. What else needs to be done?
Public sector companies and some core sector players are sitting on cash, which needs to be deployed. For instance, the railways can be asked to invest in adding new lines and capacity. Similarly, NTPC and other PSUs need to accelerate capacity addition so that others also join later.
But there are sectors such as roads where companies are unable to take up new projects as they cannot raise fresh equity…
The problem is not due to their ability to raise equity. Agencies such as NHAI, state PWD and state electricity boards are delaying payments. NHAI is invoking guarantees which is making it difficult for companies and creating uncertainty. We have flagged this issue too.
Will lending also get a boost once some of the sectoral issues such as those in power, textiles, and telecom are sorted out?
We do not have much exposure to discoms. But the fact is that they cannot run up losses and delay payments. It will certainly help if the problems are resolved. In other sectors, such as textiles, companies have suffered due to exchange rate-related problems and some of them were over leveraged. In case of telecom, there is no problem with companies that had got licences prior to 2007. They are very strong, enjoy good ratings and have the ability to put more capital. Now that spectrum can be used as a collateral, we will be in a better position to lend.
What about your own problems with NPAs? How much was it due to loan restructurings in 2008?
The worst is over and in the next two quarters, things will look better. Some of it is due to 2008. The outlook then was so buoyant that people lined up huge capital expansion and some of the demand did not materialize.
Is there any progress on capital infusion given that there are suggestions that the government may delay it due to tight fiscal position?
We will get it soon. Last year too, we received capital and the government is keen to demonstrate that it is behind banks and expanding the economy. Our internal generation is quite good and we have taken steps to use capital more efficiently. So, there is no rush at the moment.

Proposed guidelines of RBI on Banks' exposure State Bank of India, ICICI Bank to be affected

New Delhi, August 20: The SBI and ICICI Bank are among those that would be affected if RBI implements its proposed guidelines on banks' exposure to their group entities, global credit rating agency Moody's said today. Last week, the Reserve Bank released draft guidelines to limit banks' exposure to their own group non-financial and financial entities.
As per Moody's, the proposed rules would hurt companies that depend on parent banks for capital and brand support, particularly those with large international operations, or those that operate insurance, securities or asset management businesses that need capital and liquidity support to meet their business needs.
"If the RBI adopts them, the new guidelines would be credit positive for India's banks, but credit negative for group companies that rely on parent banks for capital and brand support," Moody's Investors Service said in a report. It said the "affected banks" include ICICI Bank, State Bank of India, Bank of India, Bank of Baroda and Kotak Mahindra Bank.  "The guidelines would lead these banks to re-examine the financial support they provide to group businesses as anything exceeding the stipulated limits would be detrimental to their standalone capital calculations and thus their business growth," Moody's said.
The rules, it said, would benefit India's banks because they would reduce their concentration and contagion risks from group activities. The guidelines, if implemented, would limit to 5 per cent of paid-up capital and reserves a bank's exposure to a single group non-financial entity, while the maximum exposure to regulated financial services companies would be 10 per cent. However, Moody's said that for the time being, these draft guidelines do not help the banks in any way cope with their immediate asset quality challenges owing to the difficult environment.

Soon, a bank-wide portal that will allow you to shop for best service

Customer is king Online travel portals seed the idea of a similar portal for banks Customers could compare interest rates on deposits/loans across banks at one go Figuring out which bank offers the best deal could become easy Will empower customer
Mumbai, August 20: How convenient it would be to compare at one place interest rates on deposits offered by various banks, their retail loan rates, margin amounts they require, the processing fees they charge, the add-on facilities they offer on deposits, and so on.
Extremely. The Finance Ministry also thinks so, and wants public sector banks, a la travel portals such as cleartrip, makemytrip, yatra and expedia, to explore the feasibility of setting up a bank-wide portal. These online travel portals allow travellers the convenience of comparing the fares quoted by various airlines so that they can buy the cheapest ticket plus the various add-ons such as hotel rooms and airport pick-up.
Wide choice: As things stand now, customers seeking a higher return on their investible surplus, or the cheapest home, car or personal loan, have to either go to the branches of various banks or surf their individual Web sites. No mean task as there are 26 public sector banks, including the five associate banks of State Bank of India. A more discerning customer may widen his search to the 23 private sector banks too.
Time-Saver: But with a bank-wide portal, customers can avoid the tedium of visiting the branches of various banks or surfing their Web sites, saving much time and energy. At the click of a mouse, one can compare interest rates on deposits and loans across banks, said a senior public sector bank official. “The portal could usher in transparency in banks’ dealings with customers,” he explained.
Banks will have to update their details on the portal regularly to reflect the latest position on interest rates, and any change in product features. The portal could also incorporate a feature whereby, if a customer zeroes in on a particular bank to place a deposit with or take a loan from, all he needs to do is share his contact details, so that officers from the nearest branch can contact him to complete the transaction.
Advertising: A banker said that private sector and foreign banks too may join the portal at a later stage, if it attracts enough eyeballs. The project to design, build, own and operate the portal is likely to be given to an information technology company. The company can recover the costs from advertisements placed by banks, insurance companies, mutual funds and broking firms.

Monday, August 20, 2012

SBI Clerical Recruitment : Download Call Letter for Interview


(ADVT NO. CRPD/CR/2011-12/05 dated 27-12-2011 & CRPD/CR/2011-12/5A dated 01-03-2012)

Written Examination held on 27-05-2012 & 03-06-2012

  1. Download Call Letter for Interview

  2. Download Bio-Data Form

Number of ATMs to double; will also accept deposits

NEW DELHI: The government today said banks have been asked to upgrade their ATMs to double-up as cash collecting machines as well to mobilise Rs 11 lakh crore lying as cash with people.
Also, the public sector banks have been asked to double the number of ATMs from about 63,000 in the next two years, Finance Minister P Chidambaram told reporters after reviewing working of state-owned banks and financial institutions.
"People must take to banking ... Something like Rs 11 lakh crore lies as cash in hands of people. That Rs 11 lakh crore money should not lie in hands of people, it should lie in banks," he said.
He said more people will take to banking if there are more branches and facility to draw money whenever needed and put it back into banks when they do not require it.
"Now banks have been advised to quickly upgrade their ATMs to not only cash disbursing machines, but also cash accepting machines.
"Banks should also intensify door-step banking, in bazaars, markets to collect the daily collection of shops in order to mobilise the savings of the people," the minister added.
He further said that public sector banks have about 63,000 ATMs in different parts of the country.
"The goal is to double it in two years. I am confident they will achieve it," he added.
He said upgrading ATMs to cash collecting machines will help in channelising a large part of cash lying with public in the banking system.
"Ideal banking is that money should remain in bank and I can withdraw it when I want....So the ideal is (that) all money should be in the bank," he said when asked what part of Rs 11 lakh crore should be in banks and with public.

SBH cuts lending rates

State Bank of Hyderabad has cut interest rates by up to 75 basis points on various retail loan products. This is with effect from August 21 for all new loans under floating rate. Its focus this fiscal will continue to be on retail business, an SBH release said. For housing loans, the interest rates have been reduced by 25 basis points for loans up to Rs 30 lakh and 50 basis points for loans above Rs 30 lakh — the new rates are 11 per cent and 11.50 per cent, respectively. On car loans, the new rate is 11.25 per cent. On gold loans, the new rates are 13 per cent for loans up to Rs 1 lakh and 13.25 per cent for loans above Rs 1 lakh.

Make it easy for students to get education loans, bankers told

New Delhi, Aug 18:  Finance Minister P. Chidambaram has come to the rescue of students facing difficulty in getting education loans. Henceforth, a bank manager will be penalised for “wilful rejection” of eligible education loan applications.
At the same time, it has been decided that students securing admission under management quota will also be eligible for education loans. However, they will get loans only if they meet various criteria such as the minimum required marks, etc.  These steps are part of a new set of education loan guidelines to be issued soon.  They were discussed in a meeting called by the Finance Minister to review the performance of public sector banks.
Addressing the media after the meeting, Chidambaram said, “Bank loan is a right of students meeting all the parameters. That is why each of the applications should be received and acknowledged.”  He announced that officers receiving applications cannot reject them — only a person who is at least one level senior to the receiving officer can do so. Even then, there should be a proper reason given for rejection of the application, he said.

Pulls up bankers’ body
Banking body Indian Banks Association (IBA) has already issued a circular regarding model education loan scheme. This has attracted the ire of the Minister. He showed his displeasure by asking the IBA to issue a revised circular incorporating various changes discussed and agreed upon. He also announced that the Cabinet will consider the creation of a Credit Guarantee Fund in a fortnight. This fund was announced in the Budget this year. This scheme aims to ensure better flow of credit to deserving students.

Bad loans
Talking about Non Performing Assets (NPAs), Chidambaram allayed fears by saying that the rise in NPAs was “not alarming.” Banks are also making adequate provisions for bad debt, he said. During the first three months of the current financial year (April-June), gross NPAs (as a percentage of gross advances) of public sector banks went up to 3.51 per cent from 2.57 per cent. Net NPAs have registered a 1.72 per cent rise, as against the 1.14 per cent rise in the same period of the previous year.

Banks offer festive bonanza to customers

Mumbai, August 18: With an eye on getting business in the festive season, banks have started offering discounts on interest rates and waiving processing fees to attract retail customers. Mumbai-based Union Bank of India on Saturday announced it has waived processing fees on home and auto loans from August 15 to January 26.

State Bank of Bikaner and Jaipur, an associate of the State Bank of India, has found an innovative way to attract customers. While the bank is giving a discount of 25 basis points on retail loans across the board, customers who are applying for a car loan above Rs 10 lakh on line will get an additional rebate of 25 basis points, thus making the effective interest rate at 10.5 per cent which is the base rate of the bank, said Shiva Kumar, managing director, SBBJ. He added, the bank was offering 10.75 per cent for home loan customers, and those who apply on line will get a rebate of 10 basis points.

With credit growth slowing down in the current financial year amid high interest rate, banks are seeing the festive season as an opportunity to boost their credit portfolio. State Bank of India, for example, had said that it expected growth in retail credit to offset the impact of slowdown in corporate credit. The country's largest lender had earlier announced the cut in the interest rates for home and auto loans, immediately after Reserve Bank of India announced a one per cent SLR cut in July. SBI's home loan rates stand at 10.25 per cent for home loans up to Rs 30 lakh and 10.4 per cent for the loans above Rs 30 lakh. It also slashed its interest rate on car loans by 50 basis points to 10.75 per cent across the tenors.

Another public sector lender Andhra Bank is expected to take the decision about cutting interest rates on retail products. “We will be taking a decision soon” said, K K Misra, executive director of Andhra Bank.

Central Bank of India has already launched some products and is in the process of launching few more schemes both on asset and liability side. It has launched a special 555 days fixed deposit product in which the interest rate is higher by 50 basis points that the normal deposits of that tenor. It has also launched a recurring deposit account where the customer has the flexibility of putting the money according to his/her adjustment. Normally in the recurring accounts one has to put a fixed sum every month. “We will be waiving the processing fees on the retail loans, and where there is scope of reduction of interest rates we will cut the rates” said Ram Sangapure, general manager (retail), Central Bank of India.

Lok Sabha to decide on Banking Act changes

New Delhi, August 19: The almost seven-year wait for amending the Banking Regulation Act is likely to end on Wednesday, when the Lok Sabha will take up amendments in the Banking Regulation Act for consideration and passage. This is one of three financial sector Bills aimed at ushering in a new phase of reforms.
The Lok Sabha’s list of business for August 22 states that Finance Minister P Chidambaram will move the Banking Laws (Amendment) Bill 2011 to amend the Banking Regulation Act, 1949, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.
India Inc is keenly awaiting passage of this Bill as this will push the Reserve Bank of India to issue new banking licences.
Enactment of this Bill will provide new powers to the central bank. It proposes to confer upon the Reserve Bank the power to call for information and returns from the associate enterprises of banking companies, and also to inspect the same, if necessary. The Bill also proposes to empower the Reserve Bank to supersede the board of directors of a banking company for a total period not exceeding 12 months, and appoint an administrator to manage the banking company during the said period. The RBI feels that such power will help it in regulating new as well as existing entities in a better manner.
Another key feature of the Bill is increasing the voting rights. The Bill had originally proposed raising the ceiling on voting rights of shareholders of nationalised banks to 10 per cent from 1 per cent.
For private sector banks, the Bill talked about removing the existing restriction on voting rights limited to 10 per cent of the total voting rights of all the shareholders. However, it is believed that the Government has accepted the Standing Committee’s recommendation of increasing the limit of voting rights to 26 per cent from the existing 10 per cent.
It is expected that higher voting rights will give investors more leeway. The present Bill contains some provisions of the previous Bill. The previous Bill for amendment in Banking Regulation was introduced in the Lok Sabha on May 13, 2005. Even after the Standing Committee’s recommendation, strong opposition from its then allies the Left Parties forced the Government to allow the Bill lapse in 2009 when the term of the 14th Lok Sabha ended.

Saturday, August 18, 2012

Education loans, NPAs on bank chiefs meet agenda

New Delhi, August 17: The Finance Minister P Chidambaram is scheduled to discuss expansion of education loans with banks chiefs on Saturday. This will be one of the key points on the agenda, apart from Non-performing Assets (NPAs), in the banking sector. 

This is the first such performance review meeting after Chidambaram returned to the Finance Ministry. According to the agenda note circulated for the meeting, four issues related to education loans are to be...

Friday, August 17, 2012

RBI clarifies on Premature withdrawal of Term Deposits

Mumbai, August 16: The Reserve Bank of India has clarified that in the case of term deposits with “either or survivor” or “former or survivor” mandate, banks are permitted to allow premature withdrawal of the deposits by the surviving joint depositor on the death of the other, only if, there is a joint mandate from the joint depositors to this effect. It had further stated that the joint deposit holders might be permitted to give the mandate either at the time of placing fixed deposit or anytime subsequently during the term/tenure of the deposit.
Earlier Instruction:
The earlier instruction issued by RBI in regard to the Pre-Mature payment of Time Deposits said:
“The signatures of both the depositors may have to be obtained, in case the deposit is to be paid before maturity. If the operating instruction is ‘Either or Survivor’ and one of the depositors expires before the maturity, no pre-payment of the fixed/term deposit may be allowed without the concurrence of the legal heirs of the deceased joint holder. This, however, would not stand in the way of making payment to the survivor on maturity.” (RBI instruction dated November 4, 2011)
Revised Instruction:
RBI vide their circular issued on August 16, 2012 instructed the banks that:
“The joint deposit holders may be permitted to give the mandate either at the time of placing fixed deposit or anytime subsequently during the term/tenure of the deposit. If such a mandate is obtained, banks can allow premature withdrawal of term/fixed deposits by the surviving depositor without seeking the concurrence of the legal heirs of the deceased joint deposit holder. It is also reiterated that such premature withdrawal would not attract any penal charge.”

SBI Cards targets 1 million new customers by 2014-15

SBI Cards, the second largest credit card solutions provider in India after HDFC Bank, is targeting to add one million new
customers by 2014-15, Mr Kadambi Narahari, CEO, said on Thursday.
Between 2007 and 2010, the number of credit card holders in India fell from 27 million to 17 million. Even after this consolidation in the wake of global slowdown, when many credit card companies went out of business, penetration of credit cards in India is still low — as against China and Brazil accounting for 200 million cards each, India accounts for only 18.4 million credit card holders, he told presspersons here.
SBI Cards have a customer base of 2.3 million. HDFC currently issues about 80,000 credit cards per month while SBI Cards issues about 50,000.
On an average, an Indian credit card holder spends only $755 (Rs 40,000) annually, as against the Australians ($3,352), and even the Thais ($2,084).
With its expansion in Tier II and III towns and cities becoming profitable with 12 per cent of cards reaching there, SBI Cards is now banking on the spread of the Internet to 121 million customers and grow its business by three to four times by 2014-15. India currently has 80 million banked households, he said.
Ticket booking and similar instant payment facilities have boosted the business of SBI Card, particularly after its tie up with the Indian Railways and other agencies and co-branding cards with the Oriental Bank of Commerce, Bank of Maharashtra and the Karur Vysya Bank.
Credit card spend in India is expected to increase from Rs 96,000 crore in 2011 to Rs 120 crore this year. SBI Cards and Payment Services Pvt Ltd, a joint venture with GE Capital, is the only standalone credit card providing company in India. It offers 14 different modes of payment options to customers.

Should you bet your money on NPS?

The National Pension System (NPS), opened to the common public with much fanfare in April 2009, is yet to take off. But there seems to be a growing buzz in favour of the product of late, with the insurance regulator stressing the need for revitalising the pension space and the pension regulator underlining the many advantages of NPS. But does it really merit a place in your portfolio? We try to help you take an informed decision.

Scheme outline 
This is a pension scheme launched by the government, which allows one to invest as little as Rs. 500 a month or Rs.6,000 a year.
There is no upper limit on investments, though tax benefits are available only to the extent of Rs.1 lakh, allowed under Section 80C.
The scheme allows you to choose from three investment options:
a)      In the first option, up to 50% of the investment is in equity, so it is clearly for those in a position to take risk;
b)      The second option is largely a mix of corporate debt instruments and other fixed income instruments from the government, with a small amount dedicated to equities. Understandably, the risk here is lesser than in the first option;
c)       In the third, the investment is mainly in government securities and the exposure to market linked instruments is very small. This, then, is the safest option of the three.
Anyone in the age bracket of 18-60 years can enter the scheme. Maturity will be at 60 years.

The management expense in NPS is lower than in any comparable product. This could ensure that you have a bigger corpus by the end of the term, though there is no saying just how big or small your returns will be since there is no guarantee.
Also, since it doesn’t allow withdrawals before the age of 60, the plan could well serve the purpose of compulsory saving.

Unlike in tax-saving schemes such as the Public Provident Fund (PPF) or the Employees’ Provident fund (EPF), the money you receive at maturity in the NPS is taxable.
And if experts are to be believed, the post-tax return on these annuities is much less in comparison to what other options such as fixed deposits and Senior Citizens Saving Scheme currently offer.
Also, it does not allow withdrawal of 100% of the amount received at maturity, which is when the policyholder is of the age of 60 years. One has to necessarily use 40% of the amount to buy annuities from insurance companies empanelled with the government.
An annuity assures you of a regular payment — monthly, quarterly, half-yearly or annually, as chosen by you.
In case you need the money before you have turned 60, a withdrawal of only 20% is allowed in lump sum; you have to buy annuities for the rest of the amount.

Expert speak 
“The product has three major problems that take the sheen away from it,” says Manish Chauhan, who runs a personal finance website jagoinvestor.  “First, it offers very little flexibility in terms of product design. Secondly, the maximum investment in equity is limited up to 50%, which may not work in favour of a young investor who should ideally have or who might want greater exposure to equities. The third point is that there is no guarantee on the amount of money you will earn — that’s so paradoxical for a retirement product,” says Chauhan.
The restriction on withdrawals is a sore point, too.
“The fact that there are withdrawal limitations will work well for someone in the low income group. But for any other investor, this doesn’t augur very well,” says Harsh Roongta, CEO, ApnaPaisa.
The preset maturity date at 60 may not stack well either. “For anyone who is entering beyond 55 years of age, this will not work out very well,” says Suresh Sadagopan who runs a Financial Advisory Services.

Should you go for it? 
NPS may not be the best retirement product, suggest experts
Roongta, for one, believes the scheme will become an attractive investment once the Direct Taxes Code kicks in. As per the proposed draft, NPS, provident fund and superannuation schemes will get tax breaks up to Rs. 1 lakh per year. “When this happens, NPS will be the only scheme with an equity component on which tax benefits will be available,” says Roongta. Even so, it would be advisable to cap investments in NPS subject to the limit to which the tax break is available, he adds.

Alternatives to NPS 
Taking a pension plan with the idea of wealth accumulation is not a smart game plan, say experts. A combination of the good old PPF, EPF, mutual funds may work better, they suggest.
Of course, there are withdrawal limits even in the PPF. However, the returns are assured and the maturity amount is tax-free. It’s the same with EPF investments, which are tax-free beyond five years. As for mutual funds, retirement planning is best done through the systematic investment plan, or SIP, route.

Wednesday, August 15, 2012

Banks should compensate customers for local cheque clearance delay: RBI

Mumbai: The Reserve Bank of India, or RBI, has directed banks to compensate customers for any delay in clearing local cheques. This would mean that banks will have to compensate customers monetarily if a cheque to be credited in an account on Monday, for instance, gets delayed till Wednesday.
In a note to the chiefs of all banks - both commercial and co-operative - the RBI said they should have a cheque collection policy containing details of the amount they would pay customers for any delay in collection and clearance of cheques. If this policy does not include the amount payable for delays, the bank will have to pay the savings account rate to customers as compensation, the central bank said.
"Banks are advised to reframe their cheque collection policies (CCPs) to include compensation payable for the delayed period in the case of collection of local cheques as well. In case, no rate is specified in the CCP for delay in realisation of local cheques, compensation at savings bank interest rate shall be paid for the corresponding period of delay," a statement issued by the RBI on Monday said.
Private banks such as Yes Bank, IndudsInd Bank and Kotak Mahindra Bank offer savings rate in the range of 5.5% to 7%, while state-run banks and some private banks like HDFC Bank, ICICI Bank and Axis Bank, pay 4% on similar accounts. The RBI had, in May last year, raised the savings rate from 3.5% to 4%. Many banks started offering higher rates after the central bank deregulated savings rate last October.
The RBI's decision to link compensation to savings bank account rates comes after it received several complaints from customers about delays in cheque clearance. "Instances of delayed credit to customers' accounts without any compensation for the delayed period beyond the timeline indicated in the CCPs, in respect of local cheques, have been brought to our notice," the RBI release said.

Banks begin reviving special schemes

Special schemes are back in focus as bank deposits continue to grow only at a sluggish pace. With no relief in sight for further monetary policy easing, banks have also increased interest rates on long-term deposits, to garner much needed liquidity.
State-run Bank of Baroda on Monday revised deposit rates upwards by 25-65 basis points (bps). M D Mallya, chairman and MD, said it had realigned the rates, keeping in view the sticky inflation and entrenchment of inflationary expectations. The bank has introduced a term deposit scheme of 1,111 days, offering an interest rate of 9.15 per cent. This is 15 bps higher than the normal term deposit of similar tenors.
Other public sector lenders and small private banks are also offering such schemes, where depositors would have to lock-in funds for an exact number of days. "The only attraction in such schemes is a higher rate of interest as compared to normal deposits of the same tenor bracket," said a general manager of a large public sector bank (PSB).

Central Bank of India raised rates on special deposit schemes by 20-25 bps, effective August 6. UCO Bank extended its schemes till September and also increased the maximum deposit cap to Rs 5 crore. In the past fortnight, PSBs have also realigned the rates offered on deposits up to Rs 15 lakh, on Rs lakh to Rs 1 crore and for Rs 1 crore and above.
In October 2007, the Reserve Bank of India (RBI) had asked banks to withdraw special schemes, as the rates of interest offered on these deposits were not in tune with those on normal deposits.
"No bank should discriminate in the matter of interest paid on deposits, between one deposit and another, accepted on the same date and for the same maturity, whether such deposits are accepted at the same office or at different offices of the bank," it had told banks.
To stay within regulatory limits, some banks exclude the special scheme tenor from the normal deposit bucket. For instance, a bank might offer 50 bps more on a tenor of 1,000 days, as compared to tenors of up to 999 days.
Akeel Master, partner, KPMG, said the trend might not sustain for long, as higher interest rates will have an impact on banks' margins in the absence of a corresponding growth in advances. "Banks that are under pressure from mismatch in asset-liabilities for certain tenors must have been compelled to tweak interest rates accordingly," he said.
RBI’s latest data shows bank advances, as of July 27, had grown 17.2 per cent over a year, while deposit growth lagged at 13.8 per cent .
The central bank has projected deposit growth of 16 per cent in the annual monetary and credit policy for 2012-13.
"Concerns that deposit growth has significantly been slower than credit growth for a prolonged period of time is something we have been watching closely and that was one of the issues we discussed with bankers on Monday," RBI Deputy Governor Subir Gokarn had told Business Standard in an interview after the first quarter policy announcement last month.
He said RBI might put out a projection in the second-quarter policy review to be announced on October 30. It is slated to announce the mid-quarter policy review on September 17.

Result of SBI Clerical Recruitment written Exam 2012 declared


(ADVT NO. CRPD/CR/2011-12/05 dated 27-12-2011 & CRPD/CR/2011-12/5A dated 01-03-2012)

Written Examination held on 27-05-2012 & 03-06-2012

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State Bank of India maintains margin guidance of 3.75%

Mumbai, August 13: In an interview to CNBC-TV18, Pratip Chaudhuri,  Chairman of State Bank of India says, 9% of total midcap book of Rs 1.75 lakh crore is NPA. The bank maintains its margin guidance of 3.75%. State Bank of India‘s first quarter results disappointed the street. While net profit jumped 136% year-on-year to Rs 3,752 crore, investors were unnerved by the steep rise in non-performing assets. The bank’s net interest income for the quarter rose 14.6% to Rs 11,119 crore, as a 23% rise in borrowing costs ate into the profit margins. The bank’s operating income rose 10.5% year-on-year and operating profit, 13%.

The bank’s net NPA rose to 2.22% from 1.82% quarter-on-year. The bank maintains its margin guidance of 3.75% and Chaudhuri explains, “It’s a slightly fluctuating game, but I do not think there is still possibility of it dropping very substantially. It would not. This is the bottom and we maintain 3.75% guidance because what is core to our margin is our ability to procure savings bank account at an optimum price.” Going forward, he expects the credit growth to come mainly from the retail sector. Here is the edited transcript of the interview on CNBC-TV18.

SBI's sharp downturn NPAs increase, but provisioning does not

The performance of the State Bank of India (SBI), the country’s largest lender, is in a way similar to that of the Indian Railways. Both, because of their size and critical positioning, are significantly linked to the overall health of the economy. It is, therefore, not surprising that in the first quarter of the current year the bank has reported a sharp rise in non-performing assets (NPA), indicating borrowers’ inability to service their loans in the present economic environment. This has overshadowed the large year-on-year rise in the bottom line, which has, in any case, benefited from the earlier low base then caused by catching up in provisioning. The bank’s Chairman, Pratip Chaudhuri, has highlighted the deterioration in the portfolio for mid-corporates and small and medium enterprises, which underlines the adverse conditions at the grassroots level. The agricultural and large account portfolios have also deteriorated, but Mr Chaudhuri has held out the hope that with the monsoon picking up somewhat and a chance of two large loans getting back on track, the outlook may not be all that depressing.

What cannot, however, be explained by the overall deterioration in the economic situation, which has been gradual, is the sharp setback in performance compared to the picture it had projected just three months ago. In the last quarter of 2011-12, gross NPAs had actually fallen by a small amount, compared to the sequential previous quarter. This had been made possible by upgrading of assets, more cash recoveries and low additions to non-performing assets. The hope that the bank would be able to sustain this effort in order to combat the tough year that lay ahead has been belied. Gross NPAs have gone up by a massive nearly Rs 7,500 crore and taken the ratio of gross NPA to total assets up to 4.99 per cent from 4.44 per cent. There has also been a sequential deterioration in performance across the board covering interest income, net interest margin (down by 28 basis points), other income and operating profit. Poorer operating performance, combined with higher provisioning, has led to a fall in return on assets by 12 basis points to touch 1.03 per cent.

If non-performing assets have gone up sharply then so should provisioning. However, quite perplexingly, provisioning on that account has actually gone down marginally. This amounts to making the bottom line look better than it actually is. The bank may have good reason to believe that by the end of the financial year improvement will be made in asset quality, but it is always better to first provide and then write back if you get the chance to. After Mr Chaudhuri took over, he earned appreciation by cleaning up the balance sheet and then posting improved performance. That is the trend that needed to continue.

SBI might absorb one associate bank this year

Mumbai, August 13: State Bank of India (SBI) is likely to merge one of its five associate banks in the current financial year. The board of the country’s largest lender has given its approval for the merger, and SBI will now start the process of identifying an associate for the merger. SBI merged one of its associate, State Bank of Saurashtra, with itself in 2008. State Bank of Indore was merged with SBI in 2010. According to bank officials, this time the debate is whether the bank would go for a listed entity or an unlisted entity. The unlisted associate banks are larger than the listed entities.

“The choice is between merging a listed entity and an unlisted entity,” said an official. “Merging an unlisted entity is relatively easier but such banks are huge. The listed entities are smaller but issues regarding swap ratio will have to be looked at. Ideally, we want to merge an associate entity once every two years.”

Of the five associate banks of SBI, State Bank of Hyderabad (SBH) and State Bank of Patiala are unlisted, while State Bank of Mysore (SBM), State Bank of Travancore (SBT) and State Bank of Bikaner and Jaipur (SBBJ) are listed entities. Apart from State Bank of Mysore, the others have reported profit growth for the quarter ended June.

While SBM’s profit dipped to Rs 40 crore from Rs 64 crore reported during the first quarter of the previous financial year, State Bank of Patiala posted 87 per cent growth in profit, SBBJ’s profit growth was 31 per cent, while SBT and SBH 30 per cent and 18 per cent respectively. Sharad Sharma, who was the chief general manager in SBI, recently took charge of State Bank of Mysore as the managing director.

The State Bank group has a network of 20,193 branches, including 5,096 branches of its five associate banks.  The five associate banks have six per cent market share in loans and deposits, each.

SBI Chairman Pratip Chaudhari recently said the bank management was giving special attention to State Bank of Mysore to increase its profitability. Incidentally, Chaudhuri was instrumental in the successful merger of SBI with State Bank of Saurashtra — the first  that was merged.

Monday, August 13, 2012

NPAs and bad loans have returned to haunt banks

Mumbai, August 11: India‘s biggest bank, SBI, announced quarterly results earlier this week and the share price tanked. While the bank announced a big jump in net profit, its non-performing assets also rose sharply, confirming that weak growth and slowdown in key sectors such as power and steel were continuing to hit banks.

The fortunes of banks are now more closely entwined with that of big business than before. Loans to top corporate groups account for a significant chunk of all debt. Weak growth, both in India and globally, means the bad loan problem, never far from the agenda, has returned to haunt India‘s banks. And predictably once again, the brunt will be borne by the public sector banks.

SBI‘s non-performing loans, which are a bellwether for the entire sector, were Rs 20,324 crore or 2.22% of total loans (after provisions) for the latest quarter. That might not seem much, but that number was 1.6% a year ago. Many analysts expect worse to come over the next few quarters as corporate India, hit hard by slowing domestic and global growth, feels the pinch.

Sector-specific problems such as the difficulties faced by power plants in gaining access to fuel will also play a significant role since a big chunk of non-performing assets are expected to come from infrastructure. The fortunes of India‘s banks are now more tightly entwined with that of a few big corporate groups which now make up a significant chunk of total loans.

Not all these loans have turned bad, but if slow growth and infrastructure problems remain, then expect a large chunk of these loans to weigh significantly on banks’ books.

ET presents data on the exposure of Indian banks to the biggest corporate groups, based on a report by investment bank Credit Suisse.

They now account for 13% of total loans, up from just 6% five years ago. Indian banks are now reliant for their financial health on a small group of top borrowers….

According to Credit Suisse, “all banks appear to have high exposure to the same select few groups”. Also, most of the investments by these groups are in the same set of sectors – especially power and metals.

These 10 groups account for 70% of private sector power capacity likely to come up by 2016-17.