SBI Card to announce ‘financial difficulty package’ for defaulters

The State Bank of India (SBI) country’s largest bank soon will be rolling out a “Financial difficulty package” for its customers who were regular with their repayments however, have defaulted in the recent months owing to difficult financial circumstances.

“We are planning to roll out a package which would include enhancement of the loan tenure and a downward revision of interest rates,” said SBI Card CEO Diwakar Gupta.

At present the company is charging an interest between 3.1-3.35 per cent and the revised interest charged for the defaulters would be around 2.5 per cent. Expressing views about the rising delinquencies, Gupta said the company is performing at parity with the industry standards.

“We are neither better off nor worse compared to the industry standards. Our delinquencies are in line with the industry average of around 15 per cent,” he added.

In the meantime, SBI Cards & Payments Services has signed an agreement with Dena Bank to launch a co-branded credit card. State-run Dena Bank is having a credit card holder base of 10,000 of which 6,000 are active.

Executive Director Bhaskar Sen informed “Banking and credit card management are different and our core competence lies in banking, so we decided to partner with a professional organization for credit cards”.

State bank to reduce deposit rates before cutting lending rate

A senior official of State Bank of India, the country’s largest public sector lender informed that immediately there are no plans to cut lending rates at least not before reducing deposit rates

The official pointed out, “The (overall) effect of the measures taken by RBI will come with a lag. The cost of funds may not come down overnight”.

The official said a close monitoring is being down about the situation. The Asset-Liability Committee of the bank held the meeting last night to review the situation but no decision was taken on interest rates. The panel will be meeting once again today or on Friday.

Reserve Bank of India to permeate liquidity in the cash-starved system has reduced banks’ cash reserve ratio by 250 basis points in the last nine days to 6.5 per cent, including the 100-bps cut Wednesday.

On the other hand state-owned Punjab National Bank showed an immediate reaction on Wednesday’s RBI measures by reducing its home and car loan interest rates by 50 bps late Wednesday.

But State Bank of India will probably keep a watch on the situation for some more time.

“It is too early to decide whether to cut lending rates. And before lending rates, it is deposit rates which has to be reduced,” the official said.

On October 1, SBI had announced a new deposit scheme offering 10.5 per cent on 1,000-day deposits. Previously, the bank was offering 9.50 per cent on deposits having tenure of two years to less than three years.