Friday, September 28, 2012

Banks Plan Common Job Interviews

20 banks may give IBPS the interview mandate;

SBI will not be part of it

 Kolkata, September 26: It may become a lot easier to get a job at nationalised banks. Banks are planning to have a common interview that could open up opportunities in one go in many banks for candidates, who now have to give multiple interviews for jobs in various banks. Public sector banks, which recruit about 30,000-40,000 people a year on an average, expect to save time and cost once this common interview becomes a reality. As many as 20 banks are expected to give the mandate to Institute of Banking Personnel Selection, or IBPS, to conduct the common interview on their behalf. IBPS also conducts common written test for these banks.

Senior bank executives said the governing body of IBPS had come up with the suggestion and the member banks gave their in-principle consent to the proposal at a meeting held on September 14. Banks are now required to get the respective...

Saturday, September 22, 2012

SBI tops ATM expansion in non-metros: Assocham

Mumbai, September 19: Country's largest lender State Bank of India (SBI) is more aggressive in expanding its ATM (automated teller machine) network in the non-metro and semi-urban centres as compared to its peers, according to a study by Assocham. "Unlike other banks, the State Bank of India (SBI) is expanding its ATM network in non-metro and semi-urban centres, faster than expansion in the metros," the study based on the recent Reserve Bank data said. As compared to the 5,783 ATMs in metro cities, SBI has 7,511 and 6,419 ATMs in non-metro urban areas and semi-urban areas, respectively, the Assocham statement said.
SBI's peer in the state-run banks space, Punjab National Bank is the only other bank which has more ATMs in non-metro cities than the metros, it said. The objective of financial inclusion can be better achieved by the usage of technological interventions, including ATMs, and public sector banks have an important role to play in the objective, Assocham Secretary General D S Rawat was quoted as saying.
Overall, the private sector banks, led by Axis Bank have gone about expanding their network through ATMs in a much more aggressive way than their public sector peers.  Be it, ICICI Bank, Axis Bank or HDFC their bias and preference for ATMs is for the metro cities, followed by tier two cities.Among the private sector banks, Axis Bank has the largest (10337) ATM network, followed by HDFC Bank with 9709 such machines and ICICI Bank - 9366 ATMs.
Excepting the SBI, the other banks have to go a long way before achieving the financial inclusion in the semi-urban and rural areas.
“The Finance Ministry is rightly very keen of achieving the financial inclusion of a large number of people in rural areas.  This can best be achieved by leveraging of technology and use mobile telephony and ATMs. Somehow, the public sector banks will have to take a lead in these areas. Even their brick and mortar branch network is wider in the rural and semi-urban areas than the private sector banks,” ASSOCHAM Secretary General D S Rawat said.
He said while a good beginning has been made, pooling of technology resources like the ATMs should be encouraged so that optimum use can be made to the advantage of the people. The ASSOCHAM quoted honourable Finance Minister Mr P Chidamabaram who recently noted how even the trade has not been fully brought into the banking network.
“As was pointed out by the Finance Minister, today traders are not able to deposit their cash of sales proceeds at night in any bank. In the process, they have to keep it either in the shop premises or at home taking the risks of theft and other insecurity issues. We must have technology-driven day and night banking so that a wider section of the informal economy is brought into the banking network,” Mr Rawat said. While the RBI has been expressing concerns over regulatory issues over the mobile banking, sooner or later different technology platforms have to converge and the regulators need to equip themselves to deal with new challenges and opportunities.
The ASSOCHAM said a large number of Indians still remain outside the banking network.  It is because of lack of the organized banking that the gullible people in semi urban and rural areas fall prey to unscrupulous money-lenders. “The institutions of micro-finance did make a good beginning. However, because of certain corporate governance issues, the entire experiment has become rather overshadowed by controversies. The use of technology to reach out to the bottom of the pyramid promises a lot of scope,” the ASSOCHAM Secretary General said.

State Bank of India is now most valued bank

Mumbai, September 21:  SBI today reclaimed its position as the country’s most valued bank with a total market valuation of over Rs 1.48 lakh crore, surpassing private sector player HDFC Bank. Shares of State Bank of India surged 4.3 per cent to close the day at Rs 2,212.6, taking its market value to Rs 1,48,475 crore, making it the overall seventh most valued company.

On the other hand, shares of HDFC Bank gained 3.02 per cent to Rs 625.25. In the process, the market capitalisation (m-cap) of the private bank rose to Rs 1,47,444 crore. HDFC Bank had on July 27 toppled SBI to become the country’s most valued lender in terms of market cap.

Meanwhile, Reliance Industries Ltd (RIL) continued to remain at the number one position with a m-cap of Rs 2,74,987 crore, while TCS was at second place with Rs 2,55,084 crore value. It was followed by ONGC (Rs 2,50,975 crore), Coal India (Rs 2,34,905 crore) and ITC (Rs 2,05,254 crore). Among the top-10 on the...

Monday, September 17, 2012

SBI may get Rs 4,000 crore capital support

New Delhi, September 16: The Finance Ministry is actively looking into a proposal to infuse Rs 4,000 crore in State Bank of India (SBI) to boost its capital base, and a decision in this regard would be taken in the next few months. “The bank has submitted its capital requirement plan and the Finance Ministry is considering the proposal of SBI for the capital infusion of about Rs 4,000 crore for the current fiscal,” official sources said.

Last fiscal; the government had infused Rs 7,900 crore in SBI to increase the Tier-I capital of the bank. Following the capital infusion in March 2012, the government holding in the bank rose to 61.58 per cent from 59.4 per cent. SBI had raised over Rs 16,000 crore through a rights issue in 2008. In the last SBI rights issue, government’s contribution was in the form of bonds instead of cash.

The government has already said it will infuse about Rs 15,500 crore in public sector banks during the current fiscal...

Banks take e-route to auction bad assets

Kolkata, September 15: Planning to buy a house and want to search for properties on the internet? Real estate portals are the not the only options that are available to you.

With mounting pressure on the asset quality banks are taking the electronic route to list and auction their bad assets including premium residential flats and industrial lands. Public sector banks like State Bank of India (SBI), Bank of India, IDBI Bank, Indian Overseas Bank and many others have started positing the recovery notices for their bad assets on  The dedicated website for resolution of non-performing assets (NPA) of banks and financial institutions even allow buyers to modify their search in terms of geography, asset type and value.

“We have been meeting all senior bank officials associated with NPA recoveries and creating awareness among them about the benefits that would accrue to them if they were to utilise as another alternative to resolve...

Employees first, customers second

It’s not important to be called the boss in the work place. What is needed today, especially with a younger workforce, is a sound participative culture

Two years back at the Frankfurt airport, I struck up a conversation with a German gentleman who looked a bit ruffled at the flight delay announcement. He told me how critical it was for him to reach his company headquarters in Berlin to precipitate an “employee impasse.” As I probed further, I realised much to my shock that the “impasse” had to do with a group of young campus hires, who had decided to protest against their manager’s lack of respect for “their space”.

This was getting interesting, so I asked him to tell me about what they meant by “space.” I remember he took a full minute and two to describe the situation, which looked to me an issue of micro-management.

We live in strange times, I thought to myself. When these same youngsters demand “space” at home, we bend over...

Women in Banking : Not moving up the career graph fast enough

Coimbatore/Mangalore, September 14: Bank jobs have always attracted women.  Take any branch in your town or city and you are likely to find quite a few women ‘manning’ the counters. Most of them join as clerks, and a few, as officers. Today, some of the big banks have women at the helm too.

Yet, the representation of women in the executive cadre (at the level of Chief Manager and above) is yet to improve.

According to the Khandelwal committee report on HR issues of public sector banks, till 2009, of the total women workforce of 78,000-plus, only around 300 of them were in executive positions. More than 47,000 belonged to the clerical cadre.

So, why have more women not gone up the career graph?

The challenges

“It is not that they are incompetent, but the challenges of work-life balance coupled with transfers force them to not go beyond a point in their career,” said Usha Ananthasubramanian, Executive Director, Punjab National...

SBI voices concern on inflation, credit growth

Kolkata, September 14: State Bank of India, the country’s largest public sector bank, does not expect an immediate cut in interest rates and Cash Reserve Ratio, as inflation is still high and liquidity at a comfortable level.

“A CRR cut is in the wish list for every bank. Any time when CRR is cut, banks add to their bottom line. But if liquidity is the determining criterion, then I do not see a CRR cut today,” said managing director and chief financial officer Diwakar Gupta on the sidelines of a CII seminar.

Inflation, measured on the basis of the wholesale price index rose to 7.55 per cent in August, driven by higher prices of potatoes, wheat and pulses, which rose due to poor rainfall. “Inflation is continuing to rise. In such a situation, how can a monetary authority reduce interest rate, without any indication of inflation coming down?” said Gupta.

Meanwhile, credit growth was not keeping pace with deposit growth. “Credit growth is...

Thursday, September 13, 2012

SBI to hire 20,000 over the next one year

Chennai/Mumbai, Sept 12: State Bank of India is set to expand its staff by ten per cent over the next one year. The bank is planning to add 20,000 personnel across both the officer and clerical cadres. As of June 2012, the bank had 2.14 lakh staff on its rolls.

A large portion of the new recruits will be required for the 1,200 new branches that it proposes to open this year. SBI is also recruiting to get ready for the impending retirements of its existing staff. Asked about this, A Krishna Kumar, Managing Director and Group Executive (National Banking), said, “We estimate about 35-40 per cent of the SBI’s staff or about 70-80,000 people will be retiring in the next five years across all levels.”


Short on clerks

SBI proposes to recruit 19,000 clerks and 1,000 officers now. It had 80,329 officers and 95,018 clerks on its rolls in June. Asked about the higher number of clerks being recruited, Krishna Kumar said that this was being done...

ICICI, HDFC Bank follow SBI; revise FD rates by up to 0.5 pc

Mumbai, September 12: Private sector banks like ICICI Bank and HDFC Bank on Wednesday reduced interest rates on fixed deposits by atleast 50 basis point. The reduction in deposit rates comes at a time when the economy is slowing down and credit pick up is slack. One basis point is equal to one hundredth of a percentage. Last week, State Bank of India had reduced interest rate on deposits by as much as 100 basis points across maturities to maintain profitability after lowering lending rates.
ICICI Bank has cut rates across maturities ranging from 91 days to less than five years. It now offers a maximum 8.75 per cent interest on retail term deposits compared to 9.25 per cent earlier. In the shorter tenure ranging between seven days to 45 days, however, the bank has increased rate by 50-75 basis points. A reduction in statutory reserve ratio, the amount of funds to be held in government bonds, by a percentage point is also help the banks lend Rs 15,000 crore more to corporate or retail customers. Deposits grew 14.1% year on year against RBI's projection of 16%.
Pratip Chaudari, chairman State Bank of India had said, “As of now, we are surplus in deposit for SBI. The challenge is more on pushing credit.” Also, the cut in SLR is providing some comfort. This is helping banks in meeting the credit demand, which is climbing marginally. Recent RBI data shows that credit has grown 16.7% year on year.
‘We could see the private players now reduce lending rates to get competitive as many public sector banks like State Bank of India and Andhra Bank have cut rates on select retail products,’ said a banking analyst with a domestic brokerage. ICICI Bank is also doing this to maintain a healthy margin of over 3%, he added.

SBI to add 1,200 branches this fiscal

Chennai/Mumbai, Sept 10: The State Bank of India plans to add 1,200 branches this fiscal, its Managing Director and Group Executive (National Banking), A. Krishna Kumar, said. The bank had added 645 branches in fiscal 2011-12. The last fiscal was a period of consolidation after the bank had added about 1,000 branches during the preceding three fiscal years.

SBI has a network of 14,127 branches (as at the end of the June 2012). Its dominance in the physical space is evident from some comparative numbers. Its nearest public sector competitor, Punjab National bank has 5,697 branches while its nearest private sector competitor ICICI Bank has around 2,755 branches.

Two-thirds of SBI’s network or 9,400 branches are in rural and semi-urban areas. The RBI mandates that at least one in four new branches should be in an un-banked rural area. The existing branch structure allows them considerable cushion to expand in urban and metro areas.

New branches of SBI...

Saturday, September 8, 2012

LIC's 11% SBI stake makes RBI see red

The banking regulator is unhappy with the Life Insurance Corporation (LIC) of India holding more than 10 per cent stake in State Bank of India, the country’s largest lender. LIC stake in SBI was 11.05 per cent, as on June 30.
The Reserve Bank of India (RBI) has conveyed its discomfort to the bank’s management, according to a top SBI official. “These are two big institutions. RBI is not comfortable with two large institutions having a cosy relationship,” the official said.
A top RBI official also confirmed the development. “Any institution that wants to have more than five per cent stake in a bank needs to have our prior approval, even if the stake is acquired from the secondary market,” the RBI official said. “We don’t want the banking sector to have too much capital from volatile sources,” he added.
The move comes at a time when LIC has increased stake in public sector banks by purchasing shares both from the secondary market and through direct equity infusion via preferential allotment. The cash-strapped government had asked LIC to infuse equity into public sector banks so that these lenders could have eight per cent tier-I capital. LIC had infused close to Rs 8,000 crore in several public sector banks such as Punjab National Bank, Bank of Baroda, Union Bank of India, Dena Bank, and Central Bank of India, among others, in the last financial year. LIC’s stake in SBI, however, has been acquired from the secondary market.
Interestingly, the insurance regulator is also unhappy with LIC for its more than 10 per cent stake in several public sector banks, as such a move breaches the single company cap norm. Concerned over the concentration risk, the Insurance Regulatory and Development Authority (Irda) has sought details of LIC’s investment in banks. Nearly 26 per cent of LIC’s equity investment is in banks, while nearly 39 per cent of its equity exposure is in stocks of public sector units.
According to the Insurance Act, equity exposure in a single entity is capped at 10 per cent. Thus, LIC can invest up to 10 per cent of the capital employed by the investee company, or 10 per cent of the fund size in a corporate entity, whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds.
As on March 31, 2011, LIC’s investment corpus stood at nearly Rs 11 lakh crore, of which 20 per cent, or Rs 2.2 lakh crore, was equity. Of that, investments in state-run stocks stood at Rs 85,031 crore, while exposure in banks stood at nearly Rs 59,586 crore.

One-third of new ATMs should be visually-challenged friendly

Chandigarh, September 7: The Reserve Bank of India has asked all banks to make efforts to provide banking services available to all. In a circular issued to all state-run commercial banks, the central bank has advised them to ensure all banking facilities such as chequebooks, ATMs, internet banking, lockers, retail loans, credit cards, etc, are invariably offered to visually challenged persons, without any discrimination as they are legally competent to contract.
The RBI has also directed the banks to take necessary steps to provide all existing or proposed ATMs with ramps and to provide at least a third of new ones installed, with as talking features and Braille keypads.
The move follows a complaint filed by the office of the chief commissioner for persons with disabilities, alleging visually challenged persons face problems in using banking facilities. "Banks are therefore advised to strictly extend all banking facilities to persons with visual impairment and other disabilities, reads the circular.
Most banks allow the visually impaired to open joint bank accounts only. Since ATMs are not voice enabled they cannot be accessed.

SBI group requires Rs 1 lakh crore to meet Basel-III norms

Chennai & Mumbai, September 7: The State Bank of India and its associates and subsidiaries will require around Rs 1 lakh crore of capital over the next five years to meet Basel III norms (in addition to retained earnings).  Diwakar Gupta, Managing Director and Chief Financial Officer of SBI, told Business Line this was based on a 20 per cent growth rate, and a return on equity of between 18 and 20 per cent. He conceded that the estimate could vary since growth rates during the last year as well as current year are lower.
The RBI estimates that Indian banks would need about Rs 5 lakh crore in the next five years to get ready for Basel-III norms that will be effective from 2018. The norms, developed in the backdrop of the global crisis in 2008, impose higher capital prescriptions on banks to cater to various risks.
Asked about the capital that the bank would receive from the government in the current year, Gupta said, “The number being bandied about in the press is closer to Rs 4,000 crore. We are reasonably comfortable with capital. Rs 4,000 crore will see that we don’t breach anything.”
SBI received Rs 7,900 crore infusion from the government last fiscal. He said, “We don’t need further capital under Basel III all the way up to 2015. Counter-cyclical buffer introduction may require capital beyond 2015. The extra 2.5 per cent will come up in 4 tranches and the fiscal 2015 may require a little capital.”

Capital conservation
Gupta also said that the bank would continue with its capital conservation strategy (routing SME, export credit through guarantee schemes thereby reducing the credit risk on such assets and also lowering the capital requirement on the loans). The measures had contributed to a 62 basis point rise in the tier-1 ratio of capital last fiscal (one basis point is one-hundredth of a percentage point). SBI had a capital adequacy ratio of 13.8 as of June with tier-1 ratio at 9.8 per cent.
He added, “We will try a couple of other levers, but by and large we will improve the integrity around our data and around our ratings better. We clawed back 91 basis points totally last time. Hopefully this year, we will do another 25- 30 basis points based on the same parameters.”

Rating agencies
Asked if the improvement in capital ratio would warrant a ratings upgrade by rating agencies, Gupta said, “It is very hard to say. Our stock is taking a beating. In the short term, markets reflect the mood more than the basics and I think that is the case for rating as well. Asset quality is a problem for all banks and therefore the rating agencies are well within their rights to say that there is enough stress to warrant a ratings revision. But another big item that they said affected the ratings was the inability of State Bank to raise capital at will. Now this has not changed since 1955. Why suddenly that should become an important factor while re-considering a rating? I think it is more a factor of perception than fact. We will, of course, ask the rating agencies to review our performance which is quite strong.”
Gupta said that SBI was delivering the second largest corporate profit in the country and was the largest taxpayer. “That is something the rating agency should also look at,” he added.

No pressure from government to cut rates: Pratip Chaudhuri

Mumbai, September 7: In an interview with ET Now, Pratip Chaudhuri, chairman, SBI, talks about the rationale behind their decision to cut rates as well as credit growth targets and the expected NPA levels in Q2. Edited excerpts:
ET Now: Take us through the rationale behind your decision to cut deposit rate.
Pratip Chaudhuri: Yes. Our deposit growth has been very robust from April 1 to August 31. The deposits have grown by Rs 75,000 crore and the loan growth, including commercial paper, has been only Rs 30,000 crore. Therefore, we thought we will try to restrict and moderate our deposit growth.
ET Now: Are PSU banks cutting rates under pressure from the government even though SBI has been the first to do so?
Pratip Chaudhuri: We don't cut rates because of pressure from the government. PSU banks decide their rates on their own. But while deciding the rate, one has to look at the market and the relative positioning of the bank. We adjust the rate looking at the demand. For example, in our case, we reduced the car and home loan rates thinking that the reduction would allow growth in the loan book for cars and homes.
ET Now: But many banks have revised their credit growth targets in light of low demand. Is there is a similar thought at SBI as well?
Pratip Chaudhuri: These targets are not our own. The targets are largely determined and shaped by the volumes you see. It is very easy to move the credit growth target up, but where are the deposits? Similarly, if you get more deposits and there is not enough traction in the credit market, then you have to calibrate it down. Therefore, it is always a function of demand and supply. And I do not think the individual target-settings by banks are anyway meaningful.
ET Now: What kind of loan growth are you seeing and sectors will drive this demand?
Pratip Chaudhuri: For our bank, the biggest contributor has been the construction sector, particularly the contracting firms and companies which are doing work for state government agencies. Next are the electrical machinery and the power sector which are selling their produce to the distribution companies. These have been the two biggest sectors.
There was some worry on the iron and steel front because there were problems as far as iron ore mining and availability of iron ore is concerned. The iron ore mining situation is becoming slightly better. Therefore, we expect the steel sector's raw material availability to rise and their finances to improve as well.
ET Now: Tell us about your asset quality, especially in terms of the power, iron and steel sectors. Which sectors are likely to be the biggest contributors to your NPA situation?
Pratip Chaudhuri: The levels can be known with some degree of accuracy only by the 20th or 25th of the month following the quarter, but we are working hard to control these levels.
ET Now: What kind of NPA levels are you expecting in Q2?
Pratip Chaudhuri: Restructuring pipeline is not very different from the delinquent pipeline. Therefore, for companies that are under stress but have real value asset and want to borrow against that, we are considering extending the tenure of the loans or making available more loans.
ET Now: What is the extent of restructuring that you are expecting in the second quarter? Tell us what the pipeline is looking like.
Pratip Chaudhuri: Under the SBI Act, the minimum government holding has to be 51%. Therefore, I do not think it is right for me to comment because the government's holding percentage has to be determined by the government. I can only tell you that the government has left no stone unturned in capitalising the public sector banks. Last year, they pumped in about Rs 15,000 to 20,000 crore of equity to keep the pubic sector banks well capitalised.
Therefore, I do not think anybody should doubt the commitment and ability of the government to keep the banks well capitalised. But at the same time it is important that the banks generate sufficiently large internal surpluses.

Friday, September 7, 2012

ICICI Bank to add Facebook as Transaction Platform

Hyderabad, September 5: ICICI Bank will soon add another online platform for dispensing its banking transaction services — Facebook. The country’s largest private sector lender was the first bank in India to use the social media site to provide services such as account enquiry and request for cheque.  Now it is preparing to take this initiative one step forward by offering transaction services, such as deposit or transfer of money, to its Facebook customers. This is part of its efforts to provide next-gen banking solutions, in line with its ‘Khayaal Aapka’ (your care) philosophy.
Next-Gen solutions: It has recently added tablet banking and e-locker services to its range of technology products such as Internet and mobile banking. E-Locker is a virtual online locker, which can be used to safely store electronically scanned copies of important documents in various formats. Mukesh Kumar Jain, the bank’s Chief Technology Officer, said the bank was working on this technology and indicated that it could come out with this new service in the next few months.
Social media channels will, in the near future, form an important platform for banking services, he told media-persons here today. He was in the city to launch the bank’s electronic branch, Tab Banking and E-Locker services, as part of the bank’s nation-wide rollout of next-gen banking solutions.
Security issues: In response to a question, Jain said security was not a challenge in offering transaction services through the social media platform. He said this platform will not only make it easier for customers to make use of bank services but will also help the bank expand its customer base.
Jain said although mobile banking customers formed a small group today, two-thirds of the bank’s transactions were being done through ATMs and the Internet. He said the ICICI Bank page on Facebook already has seven lakh fans. A recent study by global consultancy major KPMG had revealed that businesses in India and other emerging markets are using social media platforms more than their developed market peers to expand customer relationships.

Thursday, September 6, 2012

SBI for nearly six-fold rise in PoS terminals to 1,00,000 by March

Mumbai, September 5: State Bank of India, the country’s largest lender, plans to take its point of sale (PoS) terminals to 1.00,000 by the end of this financial year, to expand its current account (CA) base. “Our current PoS terminals are 18,500 and we plan to take it to 32,000 by October and 100,000 by March,” R Karthikeyan, chief general manager, corporate strategies and new businesses, told reporters on the sidelines of the Ficci-IBA banking summit.
SBI had engaged Visa International and Elavon as joint venture partners for setting up 6,00,000 PoS terminals across the country. However, this was called off in January this year, over differences on sharing of technology. The volume of transactions through a PoS is about Rs 4 crore a day for SBI, with the average size being Rs 2,800. Axis Bank is the market leader in this segment, with around 2,30,000 PoS terminals.
SBI is the largest debit card issuer in the country. It had about 100 million cards as of June. “We want to leverage this number to expand our PoS terminals,” said Karthikeyan. “This is a part of our endeavour to promote more electronic transactions.” He said the bank would look to Tier-II and Tier-III towns and even rural areas to expand the base.
The bank’s Current Account share at the end of the first quarter was Rs 83,485 crore or 8.1 per cent of total deposits, down 187 basis points sequentially from 10 per cent.

SBI slashes domestic term deposit rates

Mumbai, September 5: Amid a dry pipeline of loans and challenges in managing excess cash, State Bank of India on Wednesday reduced interest rates on domestic retail term deposits by 50-100 basis points. The bank said the revision in rates was for deposits of up to five years. The new rates would be effective from Friday.
For deposits of up to Rs 15 lakh, the new rate for a period of 241 days to less than a year was 6.5 per cent (the previous rate was 7.5 per cent), while that for a period of a year to less than two years was 8.5 per cent (earlier nine per cent), according to a statement by the bank.
Chairman Pratip Chaudhuri said the bank had huge surplus funds and very few proposals for loans. “From April 1 to August 31, our deposits increased by Rs 78,000 crore, while credit growth was only about Rs 20,000 crore. Second, the pipeline for loan growth, particularly for large credit, is rather dry. That is why we decided to go slightly slow in deposit mobilisation, because there doesn’t seem to be enough utilisation of the deposits. And, if we hadn’t done that, it could have affected margins.”
However, he said this might not lead to reduction in the base rate. “This is only to slow deposit mobilisation,” he said, adding the impact of Wednesday’s rate cut on the cost of funds would come with a lag, as it would only apply to new deposits.
At the end of June, SBI’s cost of deposits stood at 6.24 per cent, compared with 5.66 per cent a year earlier. While the yield on advances was 10.86 per cent, compared with 10.43 per cent in the year-ago period, net interest margin was 3.57 per cent, against 3.62 per cent a year earlier. Chaudhuri said with the revision in deposit rates, the incremental growth in deposits may turn slow. SBI’s retail term deposits rose 25 per cent to Rs 4,36,976 crore in the year ended June, while total deposits rose 16 per cent to Rs 11,02,926 crore.
For short-term deposits of 91-179 days, the new rate is 6.5 per cent (earlier seven per cent). For 180-day deposits, the rate has been revised from seven per cent to 6.5 per cent, and for 181-240 day deposits, the new rate is 6.5 per cent (7.25 per cent earlier). On reviewing credit growth estimates, Chaudhuri said, “We have not yet revised (lowered) the credit growth target for the current financial year. We are still looking at 18-20 per cent growth. The first quarter is generally slow. The consumer segment is accounting for credit demand. The industrial and commercial segments are very slack.”

RBI asks banks to issue cheques with uniform features by September 30

MUMBAI: The Reserve Bank today directed all banks to issue cheques with uniform features conforming to Cheque Truncation System (CTS) 2010 standard by end of this month.

The homogeneity in security features act as deterrent against frauds, and the fixed field placement specifications facilitate straight-through-processing at drawee banks’ end through the use of optical or image character recognition technology, RBI said in a notification.

Adherence to CTS-2010 standards has inherent advantages as the security features in cheque forms help the presenting banks to identify the genuineness of the drawee banks’ instruments while handling them in the image based scenario, it said.

To ensure the time-bound migration to CTS-2010 standard cheque formats, all banks are advised to arrange only “multi-city or payable at par CTS-2010 standard cheques not later than September 30, 2012,” it said.

“Arrange to withdraw the...

Retirements will create 1.8 lakh vacancies in public sector banks

The banking industry will need to hire 9-11 lakh employees over the next five years, according to a report by Boston Consulting Group.
The report, which includes a survey of about 14,000 customers, 50,000 bank employees and analysis of data obtained from about 35 banks in the country, said about half of the hiring will be due to attrition.
The banking sector is expected to grow at approximately 20 per cent over the next decade and will need major induction of talent, a significant part of which is to replace vacancies arising due to retirements in public sector banks. At the current rate of attrition, the industry will need to hire over four lakh more people.
“We will hire around 6,000 this year,” said Pratip Chaudhari, Chairman, State Bank of India.
Retirements in public sector banks will continue to increase and peak by 2017. In total, 1.8 lakh employees will retire and will be replaced. Depending upon the productivity growth, the industry will need 2.5-4.5 lakh additional people for growth in business.
Saurabh Tripathi, Partner & Director, BCG, said: “Public sector banks will have to double the current intake of employees to meet the talent needs of future.”

Pratip Chaudhuri said lateral recruitment has to be done with a lot of care

Mumbai, September 4: State Bank of India Chairman Pratip Chaudhuri on Monday said that lateral hiring in banks had led to frustration among existing employees.
Speaking at the curtain-raiser of the Ficci Banking Conclave, Chaudhuri said, “A high degree of lateral recruitment brings disappointment and frustration to the existing cadre and they end up saying ‘what was our fault’.”
Chaudhuri said lateral recruitment has to be done with a lot of care. In addition, he said, lateral recruitment done by some banks at general manager level, except in specialist positions such as economists or law, has not worked out well.
For SBI, Chaudhuri said, there is very little lateral recruitment, and attrition is at the end of career span (after 30-35 years).
Talking about banking in rural areas, he was of the view that employees are not ready to relocate to rural areas. “Mostly what happens is that if you say that an employee is posted at Mumbai, he/she is very happy. But the day you tell them that you have to relocate to Surat or Nashik, that is when attrition happens.”
As a solution to this issue and to boost financial inclusion, Chaudhuri suggested that banks change the way they compensate people. He explained that the compensation structure of any employee was biased in favour of metros.
“I think we need to have a reverse compensation.
There should be a compensation to work in rural, semi-urban areas. In the next wage revision with the Indian Banks’ Association, this would one of the things (that would be addressed),” he added.

SBI car loan disbursals doubled to Rs 900 crore in August

Mumbai, September 4: State Bank of India on Tuesday said its car loan disbursals almost doubled to Rs 900 crore in August, following an interest rate cut. The disbursals jumped to Rs 900 crore from the earlier Rs 550 crore in July on the back of 0.50 per cent cut in its auto loan offering, chairman Pratip Chaudhuri said.

He said the rise in advances has been observed even as the nation’s largest carmaker Maruti Suzuki’s production has dipped due to internal issues. SBI cut interest rates on auto and home loans in the first week of August, after the Reserve Bank cut the SLR (statutory liquidity requirement) holdings which was preceded by a raising of limits on export refinance.

Both the moves made additional liquidity available for the bank which the bank decided to pass on, without announcing a cut in its base rate or the minimum rate of lending. “The home loan impact will take some time to come, but car loans have gone up...

SBI revises interest rate on FCNR(B) deposits

India’s largest lender the State Bank of India (SBI) on Monday revised its interest rates on FCNR(B) (Foreign Currency Non-resident – Bank Account) deposits available in different foreign currencies. While the lender mostly hiked rates in US dollar schemes, it slashed the same with Euro deposits. The new rates are effective from September 01, 2012.

At the same time, SBI introduced four new currencies including Swiss Franc (CHF), New Zealand Dollar (NZD), Swedish Krona (SEK) and Danish Krone (DKK).


1 yr and above but less than 2 yrs.

2 yrs and above but less than 3 yrs.

3 yrs and above but less than 4 yrs.

SBI sees retail loan uptick after rate cut

Following the reduction in interest rate for retail credit by large banks, demand for such advances was picking up, said Pratip Chaudhuri, chairman, State Bank of India (SBI).

SBI, which had reduced auto and home loans, has seen disbursements double following the rate cut. Lenders such as Union Bank of India, Indian Overseas Bank, Central Bank of India had also lowered their interest rates on home loans and car loans.

Punjab National Bank on Monday said it would now lower home loan rates to base rate, which stands at 10.5 per cent, from the earlier 10.75 per cent. It also reduced car loan interest rate by 50 basis points. Kolkata based-Allahabad Bank reduced retail interest rates and waived processing fees on retail loans. It has slashed home loan rates by up to 200 basis points and car loans by 25 basis points. The cut in interest rate by banks came after Finance Minister P Chidambaram appealed to banks to lower the rates to kick-start consumer...

Monday, September 3, 2012

SBI Gujarat circle records lowest NPAs

While being on the forefront of the industrial development, Gujarat-based borrowers have set a unique example of maintaining strict discipline as far as loan repayments are concerned. As per the senior officials of the country's largest lender, State Bank of India (SBI), Gujarat has lowest rate of non-performing assets (NPAs) for the bank as compared to other states in the country.
"Our Ahmedabad circle has lowest NPAs in the country in terms of units as well as in terms of percentage to the total advances. While bank's overall gross NPAs stand at around 4.9 per cent, that of Gujarat circle hovers around 1.2 per cent. This is mainly due to healthy industries in the state," said A Krishna Kumar, MD & group executive (national banking), State Bank of India (SBI).
Kumar, who was on a visit to the city on Wednesday, informed that over the years Gujarat-based borrowers have shown strict discipline of repayment of loans. "It is not that other states are not doing it, but comparatively Gujarat has performed well in terms of keeping the NPAs low," he added.
SBI's Ahmedabad circle includes Gujarat state and union territories of Diu, Daman and Dadra Nagar Haveli and has larger exposures to sectors like retail, agriculture and mid-cap companies. "Industries are comparatively healthy in Gujarat. Generally, they maintain loan repayment schedules. Therefore our gross NPAs stay low," informed Ramesh Rangan, chief general manager (CGM), SBI - Ahmedabad circle. As on July, 31, 2012, Ahmedabad circle reported total deposits of Rs 73,254 crore and advances of Rs 29,569 crore. The circle has over 1500 ATMs with branch network of 1230 across the state.
Nationally, for the first quarter ended June 30, 2012, SBI's standalone net profit stood at Rs 3,752 crore as against Rs 1,584 crore in the same period last year. Bank's total advances grew by 18.9 per cent to Rs 916,841 crore from Rs 770,891 crore in the corresponding period last year.
While, total deposits for the bank stood at Rs 1,102,926 crore as on June 30, 2012, up from Rs 950,072 crore, showing a growth of 16.1 per cent. Gross NPAs for the period stood at around 5 per cent.

SBI signs MoU with Japan Bank for International Cooperation to help Japanese SMEs

MUMBAI: The country's largest lender State Bank of India (SBI) today signed an MoU with Japan Bank for International Cooperation (JBIC) to help small companies from the far east nation to do business here.
Regional banks from Japan do not have a presence in India but SMEs from that country operating here or planning to enter the market here need to avail of financial services and "This MOU would assist JSMEs (Japanese small and medium enterprises) to meet their financial requirements from SBI," the SBI statement said.
JBIC has been mandated by the Japanese government to coordinate with regard to the needs of JSMEs.
The MoU was signed by SBI's managing director and group executive (International Banking) Hemant Contractor and managing executive officer of JBIC, Kazuo Yuhara, today.