Monday, June 23, 2008

SBI reduces educational loans

The country’s largest public sector bank State Bank of India, has reduced interest rates on educational loans. The rates for loan amounts above Rs7.50 lakh have been reduced from 13.25% to 12.25%


Whereas, on the loan amounts less than Rs4 lakh the rates have been reduced from 12.25% to 11.75%. Rates for loan amounts above Rs7.50 lakh have been reduced from 13.25% to 12.25%. Meanwhile interest rates for amounts between Rs4 lakh and Rs7.50 lakh have remained unchanged at 13.25%.


Soon other banks might be following the suit. Says M.P. Murugan, assistant general manager, Allahabad Bank: “We are the leader in the educational loan space. We already have special lower interest rates for IIT and IIM students, at 11.25%. However, if the need arises, we may look into reducing our rates as well.”


N.R. Shet, general manager, Corporation Bank, said “We do not have immediate plans to reduce educational loan rates, but you cannot rule out the possibility of us doing so. Our rates are not that high, so we will wait and watch.”

Hsoc Matthai, 17, a student from Mumbai Any cut is, of course, good news for students expressing his views said, “Educational loans are necessary. My brother and I are planning to go for professional courses this year. Even a small decrease in interest rates makes a lot of difference. We would rather go to a bank that offers lower rates.”

Friday, June 20, 2008

SBI-Vijayawada will extend its branch network by opening 15 new branches

State Bank of India, Vijayawada branch will be setting up 125 ATMs and 15 new branches during 2008-09 as its extension plan. The region includes 205 branches in Krishna, Guntur and West Godavari districts. Earlier in 2007.08, the bank had opened 93 ATMs and 18 new branches.

Ravindra Joshi, module deputy general manager, informed the deposits of the division has increased by Rs 933 crore taking the total deposits to Rs 4,190 crore whereas advanced increased by Rs 1,241 crore, to Rs 5,920 crore.

He said the division gave Rs 342.89 crore loans for crop to 60,561 farmers. Then a sum of Rs. 12.61 crore had been given as advance to farmers for purchase of 507 tractors. The division helped in forming 1,211 rythu mithra groups and loaned them Rs 13.52 crore.

The bank has also go into contract farming under which it has given advance of Rs 18 crore to farmers in this regard while Rs 10.14 crore was advanced to dairy farmers. The small scale industries were given Rs 184 crore, while for housing loans it gave Rs 133 crore and education loans Rs 133 crore to 6,200 students. The bank has also financed 17,830 women self-help groups (SHGs) with Rs 178.30 crore. It advanced Rs 15.35 crore to 2,922 weaker section people.

All the branches in the division have been networked under core banking. He informed the branches had adopted 337 girl students from weaker sections under "Adoption of Girl Child" scheme and contributed Rs 9.34 lakh for pursuing their education.

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Monday, June 16, 2008

SBI against raising rates on lending for now

From this month Bank of India (SBI), the country's largest lender, had increased the rates on domestic deposits but for time being it is against raising interest rates on lending. This move of SBI is being considered as to set the tone for other banks.

On Saturday meeting of the assets-liability committee (Alco) was held in which a decision was taken. For the second consecutive day Alco held the meeting to discuss the issue of interest rates in the wake raise in repo rates last week by the Reserve Bank of India's (RBI), or the rate at which it lends to banks, by 25 basis points to 8 per cent.

SBI is in a different situation as its cost of funds has gone up due to an increase in deposit rates earlier this month.

On Thursday, SBI chairman Om Prakash Bhatt had informed that the bank might take a decision on raising its prime lending rate or alternatively, increase the interest rate on some of its loans to deal with the higher cost of borrowings.

Hours before his bank’s Alco meeting in Mumbai, Bhatt said in Hyderabad that SBI in the present situation might absorb the hike and will decide only after a while.

A Bank of Baroda executive said, "We will wait and watch how the industry leader moves and then decide our stance."

Bank of India senior official clarified that for the moment there bank has no plans to change in rates. "Liquidity is our prime concern but the situation is expected to change after a week," the executive said.

The first installment of advance tax has tightened the liquidity position, is estimated to have sucked out around Rs 15,000 crore from the system.

However call rates have gone up to above 8.30 per cent and is expected to cross 8.50 per cent this week. The profit on 10-year government securities has established to 8.38 per cent on Friday following inflation hitting a seven year high of 8.75 per cent.

Friday, June 13, 2008

SBI introduce centralizing pension payment work through its CBS

The largest public sector bank State Bank of India is taking initiatives to provide improved customer service to its customers. Bank under its Business Process Re-engineering Project, took one more step forward by centralizing pension payment work through its Core Banking Solutions (CBS).

Bank has setup fully computerized Centralized Pension Processing Centers in each of the 14 LHO Centers of the Bank, to extend standardized and timely pension payment. About twenty two lakh pension accounts handled by over 6800 branches spread across the country have already been covered under this initiative, and the remaining CBS branches soon will be brought under this domain.

Shri K. Sitaramam, Dy Managing Director & Group Executive (NBG) informed that, with this initiative of the bank pensioners will get very important benefits are. Under this pension will be accurately credited to their account on a common date across the country.

Basic difficulties in the decentralized process have been overcome therefore the receipt of revised instructions from the Government on account of D.A revision etc. and the communication to all branches including in far flung areas is no longer required. The amended rules are very quickly taken care of at the central level. The pensioners have been assured that the amount paid will be correct and uniform across the country.

As per Govt. directives, one time submission of life certificate in November each year would require a visit to their branch. But for pension, the pensioners are not required to come to the branches for withdrawing their monthly pension. They can withdraw money any time- anywhere (24X7) through over 8500 ATMs of State Bank free of cost or even know / transact through Internet Banking. Pension payment slips and details of pension paid will continue to be given by the Pensioner’s branch.

Shri Sitaramam added that the Central Govt. pensioners under Central Civil and Defence category will now be able to change their pension branch in a quicker and simpler manner. Pensioners who are keen to avail the benefits of the centralized pension processing can do so by approaching a nearby CBS branch of the Bank to open their account.

Tuesday, June 10, 2008

SBI to cover 548 branches under CBS

Core Banking Solution (CBS) was inaugurated at Serango of Gumma block in Gajapati district by State Bank of India (SBI) chief manager Mr MN Rao. Speaking at the inauguration Rao said all the 548 branches of SBI, in Bhubaneswar circle will be brought under Core Banking Solution (CBS) platform by the end of June 2008.

Mr Rao said “SBI is committed to provide world class technology to the people of the state, even in the remote and backward areas”. “The implementation of CBS at a remote branch like this is a bright example of the bank’s commitment towards public service”, he added.

The deputy general manager Mr BV Sarangi was also present at the occasion said that the SBI has opened 14 branches with this module in the year 2008-09. He informed, “The deposits level of the bank was Rs 4,051 crore with advance of Rs 2,032 crore”.

Earlier, during February this year the Bhubaneswar zone which comprises 199 branches in 10 coastal districts was fully placed on CBS.

Currently through core banking platform more than 99 per cent of the circle’s business is carried out. Under this scheme all the branches are connected to more than 9500 branches of the bank, sources said.

Bank sources said that under CBS, the customer can access his account in any branch of SBI and also enjoys the facility of depositing as well as withdrawing from any branch and through real time gross settlement system and national electronic funds transfer system can remittance to nationalized and private banks. The facility of internet banking and issue of ATM cards are available at the entire core banking branches.

Currently, the bank has 316 ATM counters with 21 of them installed in various railway stations. It has plans to install 369 more counters during the year, out of which 18 have been earmarked for railway stations. Bank has also extended credit facilities to about 11,800 SHG in Orissa.

Thursday, June 5, 2008

SBI to focus on non-banking businesses for major expansion

State Bank of India (SBI) India's largest public sector lender in order to ensure the group remains on a strong growth path it is trying to push growth in its non banking businesses as the banking business pace is getting slow.

SBI has chosen broking business for its major expansion drive for this year, which comes under SBI Capital Markets (SBICAPS).

This year due to increase inflation the share market has gone down and the situation has not improved. SBICAPS has missed out strongly in Bull Run in equities therefore it has decided to expand its broking presence in tier 2 and tier 3 cities.

“We are trying to leverage the huge network that our parent has and use that as an advantage of existing players,” said A P Verma, MD & CEO, SBICAPS.

Working on the process this year SBICAPS' broking subsidiary has already opened 5000 new broking accounts and has worked out plan for adding another 50,000 accounts in the coming year.

As SBI is working through for increasing its retail presence in the broking business, it is being expected that the revenue from the division will contribute just Rs 100 crore to the kitty because of the low margin nature of the business.

On the other hand SBICAPS is trying to enhance its presence in higher margin areas like loan segment and project financing.

Over the next year, SBICAPS have made plans to earn significant revenue especially from large power projects that are in the pipeline.

"We are involved in all the major power projects and expect to be a big player there,” added Verma.

SBI’s mainstream business is of lending and recent shift in focus towards non-banking subsidiaries points out that in the coming months the credit growth is going to slow down even further.

Slow down in credit growth will add pressure on the State Bank Group's consolidated finances, hence the top management expects that businesses like SBICAPS will help in reducing some of that pressure.