SBI sets up affordable home loan facility

The largest lender in the country State Bank of India has further extended its list of service, the latest addition being ‘affordable housing loan’ cell. First such facility has been set up in Nalla Sopara and initially will focus on providing home loans between 8-15 lakh.

The bank has launched this project on pilot basis and has formed an association with a few builders operating in the affordable housing segment so that the customers can get can every possible relevant information.

A bank official said "The facility will be set up near localities where affordable housing projects are undertaken. The cell is a distinct delivery structure, which has been designed to offer a simple model for appraisal/sanction methodology suited to the segment."

Discontent amongst SBI unions regarding merger of the subidiaries

The proposal of merger of all the subsidiaries with in State Bank of India suffered a huge setback when the officers and the staff members with the largest lender in the country expressed discontent regarding the merger of the subsidiaries.

Stat Bank Staff Union and SBI Officers Association of Kerala Circle said that such a move might hamper the growth of the India Public Sector Banking System and they even think that it will ultimately lead to the privatization of Indian financial sector.

The Union also said that as a lot of population in the country is yet devoid of banking system and thus it provides all the banks a handsome opportunity to grow.

According to the Union as the bank and the subsidiaries are growing at a good pace and they are earning satisfactory benefits there is no not of merger instead the banks needs to increase their branch count so that they could cater more and more people in the country.

Earlier while announcing the initiation process of the merger the senior official wit the bank accounted for various benefits that are expected through this merger, most importantly that it will cut the un-necessary competition prevailing between the subsidiaries of the same group and also the bank will be able to channelize talent pool available.

SBI experiencing dip in home loan demand

After recording a handsome growth of 32 percent in the home loans advances last fiscal, the largest lender in the country State Bank of India is likely to experience a dip in the home loan growth in the present fiscal year.

Inflation is the main culprit, due to which there has been a drop in the demand for the home loans. In the current quarter alone, SBI hiked the base rate twice that made home loans dearer for the customers.

A SBI official said “Our home loan advances growth will be a shade lower than last year. The drop is because demand for home loans has come down. Inflation has impacted the demand. High real estate prices are rising; interest rates are also responsible for bringing down demand of home loans.”

Another factor that contributed significantly is the change in the pricing structure. The teaser loan scheme that was very popular amongst the customers in whom the bank charged 8% interest rate for the first year then 9% for the second year and floating rate thereafter, has lost its charm.

SBI free to reduce its stake to 51% in subsidiaries

The largest lender in the country State Bank of India will now be free to reduce its stake in subsidiary banks to up to 51 percent. All this is made possible after the Government proposed a bill to be introduced in the Parliament.

Being able to do this, SBI will be able to raise capital and boost its operations.

The Managing Director and CEO of icra Mr. Naresh Takker said "This will give SBI the flexibility to raise funds for its associate banks rather than infusing capital all by themselves. However, it is unlikely that SBI will opt for this option for its associate banks, specially the unlisted banks, since it is in consolidation mode."

Earlier there were 7 subsidiaries of SBI but the bank merged two of them with itself some time ago. Now there are 5 subsidiaries left that includes State Bank of Bikaner & Jaipur, State Bank of Travancore, State Bank of Mysore , State Bank of Hyderabad and State Bank of Patiala.