On Tuesday the chairman of State Bank of India, the country's biggest lender, said since last October the interest rates have been falling but there are chances that interest rates might get strengthen in six months as credit is picking up. O.P. Bhatt informed reporters as the increase in business activity can be seen which in turn will result in higher loan growth in the second half of the year. He added, "Six months down the line with credit rising and the entire borrowing taking place, rates will either stabilize or even harden".
"There are lots of signs available in the economy that business activity is increasing across multiple sectors. But it is still not showing up in bank lending. We believe that with time lag it is going to happen." Since last October the central bank has cut its main lending rate by 425 basis points in order to boost the slowing economy and state-run banks responded to this by reducing rates by 150-200 basis points. State Bank, along with its associates controls a quarter of the Indian bank loans and deposits; on June 24 it reduced its lending rate by 50 basis points. Since November its benchmark lending rate has declined by 200 basis points since November. In November Indian bank loan growth has come down from around 27 percent in to about 15 percent in June and rates have halved to around 30 percent seen in the financial year to March 2008. Bhatt addressed the reporters after he along with other bank chiefs met the central bank governor, D. Subbarao, before a quarterly monetary policy review on July 28. He told in the meeting the main focus was on the current "liquidity overhang" in the system and managing government borrowing without stress. Finance Minister Pranab Mukherjee said in the budget on Monday the fiscal deficit will touch a 16-year high of 6.8 percent of gross domestic product and the government will have to borrow from the market to reduce the shortfall.
Bhatt added commercial banks have requested the Reserve Bank of India (RBI) to extend loan restructuring program till December. Last year the central bank has allowed banks to re-set terms of some loans where they are not receiving repayments regularly, except for real estate and personal, to avoid them from being accounted as non-performing loans in the course of an economic downturn. "We have asked RBI to extend loan restructuring deadline as it is taking lot of time as cases of consortium lending involves multiple banks," Bhatt said. Shares in State Bank, which having a market value of $22 billion, ended down 1.1 percent lower at 1,636.35 rupees in a Mumbai market that rose 0.9 percent.
Thursday, July 9, 2009
Tuesday, July 7, 2009
SBI promises promotions to top levels and overseas postings to prospective executives
State Bank of India (SBI) is looking for 500 management executives therefore it is looking for best talent. Therefore bank is promising to its prospective management executives a promotion to top levels as well as postings in overseas branches.
The bank said, it has prepared an “attractive promotion policy to reach the top levels of the bank” along with an “attractive compensation package”.
In addition, “an unmatched opportunity to experience the rich diversity of India through posting at various places and also foreign locations” is also being publicized.
SBI in its recruitment notice for the management executives has stated, “The bank has a massive and unmatched distribution network of 11,655 domestic branches, reaching every nook and corner of the country, 92 foreign offices spread over 32 countries covering all time zones as well as world-class technology base providing st ate-of-the-art virtual banking channels”.
It further added, “On an ever expanding banking horizon, globalization has opened up infinite business opportunities at home and abroad.”
Earlier SBI has mentioned that in the current fiscal, the bank will be recruiting 33,703 new hires of 2008-09 and also has the plan for the recruitment of 13,000 employees in 2009-10.
The bank said, it has prepared an “attractive promotion policy to reach the top levels of the bank” along with an “attractive compensation package”.
In addition, “an unmatched opportunity to experience the rich diversity of India through posting at various places and also foreign locations” is also being publicized.
SBI in its recruitment notice for the management executives has stated, “The bank has a massive and unmatched distribution network of 11,655 domestic branches, reaching every nook and corner of the country, 92 foreign offices spread over 32 countries covering all time zones as well as world-class technology base providing st ate-of-the-art virtual banking channels”.
It further added, “On an ever expanding banking horizon, globalization has opened up infinite business opportunities at home and abroad.”
Earlier SBI has mentioned that in the current fiscal, the bank will be recruiting 33,703 new hires of 2008-09 and also has the plan for the recruitment of 13,000 employees in 2009-10.
Friday, July 3, 2009
SBS successful merger with SBI builds confidence for future M&As
State Bank of India (SBI) will be finalizing the merger of State Bank of Indore with itself in the next twelve months.
Meanwhile the State Bank of India (SBI) Chairman O P Bhatt has received the final approval from the government on the proposal to merge State Bank of Saurashtra (SBS) with the parent bank on August 13 last year.
Precisely a month later, SBI has incorporated the systems of the two banks. Jeevan Das Narayan, general manager in the SBI’s mergers and acquisitions (M&A) cell said, “It was an overnight operation and next morning, when people logged in, no one even realized that we had moved to a common platform”.
The good experience the banks have attained has given the M&A cell the confidence to complete a second merger – with State Bank of Indore -- within the next 12 months.
Bharati Rao while sitting in her 18th floor office at the SBI headquarters, advisor in-charge of the bank’s M&A cell, is closely examining the feedback her team is receiving on the bank’s proposal to acquire State Bank of Indore, its smallest associate bank.
However, bank’s discussion board has received an optimistic feedback from ‘Jai ho’ to ‘Yeh to hona hi tha’. Although the employees union has called for a strike after the two boards have approved the plan 10 days ago, Rao isn’t too disturbed.
After the merger over 6,000 State Bank of Indore employees will get the benefit of pension and better healthcare. Rao stated, “But it’s not just about better facilities. A big benefit is that post-merger; State Bank of Indore employees can also work for a large financial conglomerate that has interests in insurance, mutual fund and pension”.
Similar to SBS case, top executives from SBI and State Bank of Indore will be shortly holding consultations with employees and clients of the Bhopal-headquartered body to explain the rationale and benefits of the merger.
Rao, who was earlier deputy managing director at SBI stated, “Most customers do not like dislocation. We need to tell them that they will have access to all products and services that they use at present and may get some more. A lot of times pricing at SBI is much better”.
The strategy adopted will be simple. The large clients will be common; some of the smaller ones will be serviced by the mid-corporate group. In case of SBS, the only upsetting for clients has been that some of them are now being serviced by SBI’s Ahmedabad office, instead of the SBS head office at Bhavnagar. The helping point in this case was that senior SBI executives led by Bhatt met clients to alleviate whatever fears they had.
But the main focus is on employees, as they are the ones who make a merger a success or a failure. Once more, it is the SBS experience that SBI is banking on, though with minor variations.
In the beginning, some executives from State Bank of Indore will be joining Rao’s team to make sure a smooth merger. Besides, the entire staff will be given training in batches to ensure problem-free system integration. In case of SBS, SBI had given six months training almost the entire 7,000 employees of the former.
Incorporation of employees is something that Rao’s team had worked on very closely since the last public sector bank merger of New Bank of India with Punjab National Bank is still causing heartburns to the employees of both the banks, who are still bitter about delay in promotion.
Therefore SBI examine the data on promotions over a five-year period, worked on nearly half-a-dozen models, hired a consultant and then finalized the policy. And, to fight off any problems later, SBI even got legal opinion to endorse the move.
In smaller bank, the chances of promotion are higher. As, there were only 2,000 officers at SBS, over 90 per cent of whom were in ranks up to AGM. While at SBI, there were nearly 50,000 officers. Although all SBS officers have joined at the same level and their seniority has not been affected, the promotion policy predict that it will take one year extra for an SBS officer to get a promotion. In case an SBI officer is eligible for promotion in four years, it will take a former SBS officer five years.
The other area of focus is to ensure that there is no disturbance at the branch level. At the head office in Bhavnagar, the three zonal offices in Gujarat and at the two regional offices in Mumbai and Delhi, the clerical staff is redeployed. But some 500 officers were shifted to the Ahmedabad branch. But in the zonal and regional offices, it was ensured that officers up to the level of chief manager were not moved outside the state.
A senior executive of SBS, who is at present part of the SBI set-up, said that the policy has worked out well, at least so far. “State Bank of Indore employees know exactly what was given to the SBS staff. So, that part is clear now,” said Rao.
Although she is unwilling to discuss the plan for the remaining five associate banks, SBI’s policies have been worked out carefully over the last two years or so. “The thought was, let’s give it a try. If it works out, it’s wonderful, if it does not, its okay,” said a senior SBI executive.
A merger is right decision as there is too much of duplication. For instance, there are many places where an SBI branch is competing with one of its associates in mobilizing deposits and giving out loans.
“All the seven banks have an establishment cost, which can be one and we can work in unison. They have strong presence in some areas which we can make use of,” Rao said.
If SBI is able to merge all the associate banks, its branch network will increase nearly by 40 per cent, while the profits would be 30 per cent extra. And, to top it up, there will be significant savings. The SBS merger has already led to subsequent savings of a few hundred crore though no firm assessment has been made, bank executives informed.
“Given the common ownership, common technology platform and a common chairman, that should not be tough… At the front-end, there was no change for the customer -- the logo is the same, though there were some changes in the stationery and the boards at the branches,” Rao added.
So, what after State Bank of Indore? No one at SBI is ready to reveal anything. But what makes SBI’s measure unique is the fact that none of the other public sector banks have taken any action beyond giving their support for consolidation. Maybe they might illustrate upon SBI’s experience to pull off mergers, whenever they finalize one.
Meanwhile the State Bank of India (SBI) Chairman O P Bhatt has received the final approval from the government on the proposal to merge State Bank of Saurashtra (SBS) with the parent bank on August 13 last year.
Precisely a month later, SBI has incorporated the systems of the two banks. Jeevan Das Narayan, general manager in the SBI’s mergers and acquisitions (M&A) cell said, “It was an overnight operation and next morning, when people logged in, no one even realized that we had moved to a common platform”.
The good experience the banks have attained has given the M&A cell the confidence to complete a second merger – with State Bank of Indore -- within the next 12 months.
Bharati Rao while sitting in her 18th floor office at the SBI headquarters, advisor in-charge of the bank’s M&A cell, is closely examining the feedback her team is receiving on the bank’s proposal to acquire State Bank of Indore, its smallest associate bank.
However, bank’s discussion board has received an optimistic feedback from ‘Jai ho’ to ‘Yeh to hona hi tha’. Although the employees union has called for a strike after the two boards have approved the plan 10 days ago, Rao isn’t too disturbed.
After the merger over 6,000 State Bank of Indore employees will get the benefit of pension and better healthcare. Rao stated, “But it’s not just about better facilities. A big benefit is that post-merger; State Bank of Indore employees can also work for a large financial conglomerate that has interests in insurance, mutual fund and pension”.
Similar to SBS case, top executives from SBI and State Bank of Indore will be shortly holding consultations with employees and clients of the Bhopal-headquartered body to explain the rationale and benefits of the merger.
Rao, who was earlier deputy managing director at SBI stated, “Most customers do not like dislocation. We need to tell them that they will have access to all products and services that they use at present and may get some more. A lot of times pricing at SBI is much better”.
The strategy adopted will be simple. The large clients will be common; some of the smaller ones will be serviced by the mid-corporate group. In case of SBS, the only upsetting for clients has been that some of them are now being serviced by SBI’s Ahmedabad office, instead of the SBS head office at Bhavnagar. The helping point in this case was that senior SBI executives led by Bhatt met clients to alleviate whatever fears they had.
But the main focus is on employees, as they are the ones who make a merger a success or a failure. Once more, it is the SBS experience that SBI is banking on, though with minor variations.
In the beginning, some executives from State Bank of Indore will be joining Rao’s team to make sure a smooth merger. Besides, the entire staff will be given training in batches to ensure problem-free system integration. In case of SBS, SBI had given six months training almost the entire 7,000 employees of the former.
Incorporation of employees is something that Rao’s team had worked on very closely since the last public sector bank merger of New Bank of India with Punjab National Bank is still causing heartburns to the employees of both the banks, who are still bitter about delay in promotion.
Therefore SBI examine the data on promotions over a five-year period, worked on nearly half-a-dozen models, hired a consultant and then finalized the policy. And, to fight off any problems later, SBI even got legal opinion to endorse the move.
In smaller bank, the chances of promotion are higher. As, there were only 2,000 officers at SBS, over 90 per cent of whom were in ranks up to AGM. While at SBI, there were nearly 50,000 officers. Although all SBS officers have joined at the same level and their seniority has not been affected, the promotion policy predict that it will take one year extra for an SBS officer to get a promotion. In case an SBI officer is eligible for promotion in four years, it will take a former SBS officer five years.
The other area of focus is to ensure that there is no disturbance at the branch level. At the head office in Bhavnagar, the three zonal offices in Gujarat and at the two regional offices in Mumbai and Delhi, the clerical staff is redeployed. But some 500 officers were shifted to the Ahmedabad branch. But in the zonal and regional offices, it was ensured that officers up to the level of chief manager were not moved outside the state.
A senior executive of SBS, who is at present part of the SBI set-up, said that the policy has worked out well, at least so far. “State Bank of Indore employees know exactly what was given to the SBS staff. So, that part is clear now,” said Rao.
Although she is unwilling to discuss the plan for the remaining five associate banks, SBI’s policies have been worked out carefully over the last two years or so. “The thought was, let’s give it a try. If it works out, it’s wonderful, if it does not, its okay,” said a senior SBI executive.
A merger is right decision as there is too much of duplication. For instance, there are many places where an SBI branch is competing with one of its associates in mobilizing deposits and giving out loans.
“All the seven banks have an establishment cost, which can be one and we can work in unison. They have strong presence in some areas which we can make use of,” Rao said.
If SBI is able to merge all the associate banks, its branch network will increase nearly by 40 per cent, while the profits would be 30 per cent extra. And, to top it up, there will be significant savings. The SBS merger has already led to subsequent savings of a few hundred crore though no firm assessment has been made, bank executives informed.
“Given the common ownership, common technology platform and a common chairman, that should not be tough… At the front-end, there was no change for the customer -- the logo is the same, though there were some changes in the stationery and the boards at the branches,” Rao added.
So, what after State Bank of Indore? No one at SBI is ready to reveal anything. But what makes SBI’s measure unique is the fact that none of the other public sector banks have taken any action beyond giving their support for consolidation. Maybe they might illustrate upon SBI’s experience to pull off mergers, whenever they finalize one.
Wednesday, July 1, 2009
Merger of State Bank of Indore to take place with parent bank SBI
In a recent meeting with bank chiefs the Finance Minister, Pranab Mukherjee had approved the consolidation process among the State-owned commercial banks, following this State Bank of India (SBI) has begin the process of merger.
Working on the same line on Friday the board of State Bank of Indore passed a declaration to open the way for the merger process with the SBI. At present the SBI is holding 98.05 per cent stake in State Bank of Indore, a smallest associate bank.
Following this the SBI board met in Mumbai has passed a declaration for the merger of State Bank of Indore with the parent bank. This is the second associate bank to be merged with the parent after the State Bank of Saurashtra in July 2008. In case the merger process of State Bank of Indore gets through then only five associate banks will independently exist within the Group they are State Bank of Hyderabad, State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank of Travancore, and State Bank of Patiala.
The latest consolidation process is being taken up in spite of the Government-Reserve Bank of India appointed Committee on Financial Sector Assessment (CFSA) which recommended that banks should not be reckless in merger process in the current economic conditions. According to the RBI Deputy Governor, Dr K. C. Chakrabarty the current economic environment is not matured for consolidation among the public sector banks and there main focus should be on financial inclusion.
In 1960 State Bank of Indore became a subsidiary of the SBI. The bank is having around 500 branches, with as many as 357 in Madhya Pradesh. By the end of the fiscal year March 31, 2009, it has made a recorded profit of Rs 278.92 crore. As on March 31 banks total business accounted to about Rs 50,500 crore. It is having a network of 400 automated teller machines (ATMs).
On Friday in Indore a board meeting of State Bank of Indore was held in which the workman-director, Mr Atul Pradhan, gave a nonconforming note on the declaration that was taken up in the meeting as a table agenda.
Sources closely related to the developments said the board approved the declaration by a majority vote with five members in favor of the proposal and only one (the workman director) nonconforming.
Mr Alok Khare, President of the All India Bank Officers’ Association, told Business Line in the meeting there was no officers’ representation as the board seat for officers is currently vacant.
Banking industry observers said that it would be remarkable to see if the proposed merger of State Bank of Indore with SBI will come under the scrutiny of the Competition Commission of India (CCI). Although the CCI is functional, the provisions related to regulation of combinations under the Competition Act are yet to be reported.
Working on the same line on Friday the board of State Bank of Indore passed a declaration to open the way for the merger process with the SBI. At present the SBI is holding 98.05 per cent stake in State Bank of Indore, a smallest associate bank.
Following this the SBI board met in Mumbai has passed a declaration for the merger of State Bank of Indore with the parent bank. This is the second associate bank to be merged with the parent after the State Bank of Saurashtra in July 2008. In case the merger process of State Bank of Indore gets through then only five associate banks will independently exist within the Group they are State Bank of Hyderabad, State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank of Travancore, and State Bank of Patiala.
The latest consolidation process is being taken up in spite of the Government-Reserve Bank of India appointed Committee on Financial Sector Assessment (CFSA) which recommended that banks should not be reckless in merger process in the current economic conditions. According to the RBI Deputy Governor, Dr K. C. Chakrabarty the current economic environment is not matured for consolidation among the public sector banks and there main focus should be on financial inclusion.
In 1960 State Bank of Indore became a subsidiary of the SBI. The bank is having around 500 branches, with as many as 357 in Madhya Pradesh. By the end of the fiscal year March 31, 2009, it has made a recorded profit of Rs 278.92 crore. As on March 31 banks total business accounted to about Rs 50,500 crore. It is having a network of 400 automated teller machines (ATMs).
On Friday in Indore a board meeting of State Bank of Indore was held in which the workman-director, Mr Atul Pradhan, gave a nonconforming note on the declaration that was taken up in the meeting as a table agenda.
Sources closely related to the developments said the board approved the declaration by a majority vote with five members in favor of the proposal and only one (the workman director) nonconforming.
Mr Alok Khare, President of the All India Bank Officers’ Association, told Business Line in the meeting there was no officers’ representation as the board seat for officers is currently vacant.
Banking industry observers said that it would be remarkable to see if the proposed merger of State Bank of Indore with SBI will come under the scrutiny of the Competition Commission of India (CCI). Although the CCI is functional, the provisions related to regulation of combinations under the Competition Act are yet to be reported.
Wednesday, May 13, 2009
Bank reaches at the doorstep of the villagers
People living in villages, such as Shivaji Gulab Dhegre, 22 an owner of a small paan shop in Ghotawade village in Mulshi Taluka, 30 km from Pune, never had a bank account and also have never thought of opening one as they earn just enough income to make both ends meet.
As new technologies are being adapted by the Indian banking industry to take banking to the far away villages, working on the same line Financial Information Network and Operations (FINO), a Mumbai-based Biometric-enabled smart card solutions provider, along with the State Bank of India (SBI), is making a unique offer to Dhegre and the 2,000-odd people of the village, mostly farmers and workers of nearby factories: a bank account (without a passbook), where they can deposit an amount as low as Rs 10.
The most interesting part of this offer is the villages don’t have to go to the bank to deposit or withdraw money. The bank will reach their doorstep.
Ashish Rath, a management trainee with FINO, who is looking after the company’s ground operations in Ghotawade, explained, “The accountholder is provided a biometric smart card, which has personal information and fingerprint details. When the accountholder needs to withdraw or deposit money, all he/she needs is to do is swipe the card on a special machine called the Point of Transfer (POT) machine, and enters the PIN number. All agents of FINO, who go door-to-door, carry the machine.”
A person can deposit a maximum amount of Rs 50,000. In case a customer deposits money more than the limit then, his account is upgraded to the main SBI branch. Kanhaiya Lal, a factory worker, who is ready to open an account, said, “Even if you have a regular bank account, it makes sense to open this account, because the nearest SBI branch is at Pirangut, 8 km away, and the nearest ATM is at Hinjewadi, 25 km away.”
The process of opening an account has been kept simple. One has to just provide the name, address and the amount of land one owns, if any. There is minimal paperwork or extra documents are asked for. Two months back the process was introduced in Pune district, the company is having 4,500 customers in four talukas, Rajgurunagar, Mulshi, Daund, and Ambegaon, informed Sachin Bhahiti, FINO’s district co-ordinator.
The first batch of 60 customers was given their smart cards at Rajgurunagar last Wednesday. Bhahiti is expecting to enroll 2 lakh customers across the district in the next eight months. Rishi Gupta, Chief Financial Officer, FINO informed, “We have a customer base of 5.5 million across the country. We expect Pune region to add to that substantially.”
As new technologies are being adapted by the Indian banking industry to take banking to the far away villages, working on the same line Financial Information Network and Operations (FINO), a Mumbai-based Biometric-enabled smart card solutions provider, along with the State Bank of India (SBI), is making a unique offer to Dhegre and the 2,000-odd people of the village, mostly farmers and workers of nearby factories: a bank account (without a passbook), where they can deposit an amount as low as Rs 10.
The most interesting part of this offer is the villages don’t have to go to the bank to deposit or withdraw money. The bank will reach their doorstep.
Ashish Rath, a management trainee with FINO, who is looking after the company’s ground operations in Ghotawade, explained, “The accountholder is provided a biometric smart card, which has personal information and fingerprint details. When the accountholder needs to withdraw or deposit money, all he/she needs is to do is swipe the card on a special machine called the Point of Transfer (POT) machine, and enters the PIN number. All agents of FINO, who go door-to-door, carry the machine.”
A person can deposit a maximum amount of Rs 50,000. In case a customer deposits money more than the limit then, his account is upgraded to the main SBI branch. Kanhaiya Lal, a factory worker, who is ready to open an account, said, “Even if you have a regular bank account, it makes sense to open this account, because the nearest SBI branch is at Pirangut, 8 km away, and the nearest ATM is at Hinjewadi, 25 km away.”
The process of opening an account has been kept simple. One has to just provide the name, address and the amount of land one owns, if any. There is minimal paperwork or extra documents are asked for. Two months back the process was introduced in Pune district, the company is having 4,500 customers in four talukas, Rajgurunagar, Mulshi, Daund, and Ambegaon, informed Sachin Bhahiti, FINO’s district co-ordinator.
The first batch of 60 customers was given their smart cards at Rajgurunagar last Wednesday. Bhahiti is expecting to enroll 2 lakh customers across the district in the next eight months. Rishi Gupta, Chief Financial Officer, FINO informed, “We have a customer base of 5.5 million across the country. We expect Pune region to add to that substantially.”
Tuesday, May 5, 2009
PSBs headed by SBI to open at least 15,300 ATMs
Recently the Reserve Bank of India has liberated the norms on setting up of ATMs therefore public sector banks (PSB) have drafted enormous development plans to set up at least 15,300 ATMs across the country by the end of this fiscal year.
Under this expansion plan five leading state-owned banks, headed by State Bank, will be setting up 15,300 ATMs to help retail customers, for whom the service has become free from April 1 this year after the implementation of the RBI directives.
State Bank Group, is having the largest number of ATMs in the country, will be opening 13,400 more ATMs in the current fiscal after which the total number will increase to 25,000 by end-fiscal, an SBI official informed.
The official said, "Customer retention, particularly in the retail segment, necessitates setting up of large number of ATMs.
Presently, State Bank Group has 11,600 ATMs pan-India. We plan to more than double this number this fiscal”.
Recently, in the norms related to ATMs, Reserve Bank had permitted banks to open offsite ATMs without its prior approval. The apex bank has also allowed free usage of third party ATMs for customers from April 1.
However, banks have been allowed to charge Rs 18 per transaction from each other for every third party ATM transaction.
Under this expansion plan five leading state-owned banks, headed by State Bank, will be setting up 15,300 ATMs to help retail customers, for whom the service has become free from April 1 this year after the implementation of the RBI directives.
State Bank Group, is having the largest number of ATMs in the country, will be opening 13,400 more ATMs in the current fiscal after which the total number will increase to 25,000 by end-fiscal, an SBI official informed.
The official said, "Customer retention, particularly in the retail segment, necessitates setting up of large number of ATMs.
Presently, State Bank Group has 11,600 ATMs pan-India. We plan to more than double this number this fiscal”.
Recently, in the norms related to ATMs, Reserve Bank had permitted banks to open offsite ATMs without its prior approval. The apex bank has also allowed free usage of third party ATMs for customers from April 1.
However, banks have been allowed to charge Rs 18 per transaction from each other for every third party ATM transaction.
Wednesday, April 22, 2009
SBI for term loans and working capital for SMEs freeze rates at 8%
State Bank of India, the country’s largest lender, has freezed interest rates at 8% on certain term loans and working capital for small and medium enterprises (SMEs).
Bank will be freezing interest rates on working capital assistance up to September 2009, while bank informed that loans up to Rs 5 lakh, which are covered under the Credit Guarantee Trust for Micro and Small Enterprises, will be frozen for two years.
Moreover, for new SMEs with fund-based loan requirements of between Rs 5 lakh and Rs 25 lakh, the bank is offering a fixed rate of 10 per cent a year for the next two years.
B S Bhasin, the bank’s chief general manager in-charge of SMEs, told that the lending rates for new term loans of up to Rs 5 lakh are in the range of 8.5 per cent to 10 per cent. While the term loans between Rs 5 lakh and 25 lakh, rates vary between 9 per cent and 11 per cent. The bank, is having around 1.2 million SME clients, and has already announced two products for the small industry segment – SME Care and SME Help.
In SME Care, bank offers an additional working capital facility of 20 per cent of the fund-based limits in order to take care of inventories even of delayed payments from their buyers due to the current downturn. While SME Help is a term loan product being offered for the purchase of fixed assets, including generator sets.
However SBI has not involved in the latest round of reduction in benchmark prime lending rates, but it has decided to offer specialized packages for home, auto and SME loans where it has freezed interest rates for a specified period of time at 8 per cent and would go back to to the prevailing level once the special offer is over.
Besides this, Bhasin explained that SBI has been insistently restructuring loans of SMEs that are facing temporary cash flow problems. Till now, the bank has instigated restructuring in about 41,000 cases out of the 800,000 accounts. The sectors which had come under high stress due to slowdown in demand and financial crisis are textiles and auto components. At the end of March 2009, the bank’s outstanding SME loan portfolio stood at Rs 1,00,000 crore. SBI for the current financial year, has a target of 24 per cent growth from the segment with main focus on segments such as chemicals and pharmaceuticals.
A bank executive informed, “The garments and auto sectors are showing signs of revival. But developments have to be watched carefully”.
Bank will be freezing interest rates on working capital assistance up to September 2009, while bank informed that loans up to Rs 5 lakh, which are covered under the Credit Guarantee Trust for Micro and Small Enterprises, will be frozen for two years.
Moreover, for new SMEs with fund-based loan requirements of between Rs 5 lakh and Rs 25 lakh, the bank is offering a fixed rate of 10 per cent a year for the next two years.
B S Bhasin, the bank’s chief general manager in-charge of SMEs, told that the lending rates for new term loans of up to Rs 5 lakh are in the range of 8.5 per cent to 10 per cent. While the term loans between Rs 5 lakh and 25 lakh, rates vary between 9 per cent and 11 per cent. The bank, is having around 1.2 million SME clients, and has already announced two products for the small industry segment – SME Care and SME Help.
In SME Care, bank offers an additional working capital facility of 20 per cent of the fund-based limits in order to take care of inventories even of delayed payments from their buyers due to the current downturn. While SME Help is a term loan product being offered for the purchase of fixed assets, including generator sets.
However SBI has not involved in the latest round of reduction in benchmark prime lending rates, but it has decided to offer specialized packages for home, auto and SME loans where it has freezed interest rates for a specified period of time at 8 per cent and would go back to to the prevailing level once the special offer is over.
Besides this, Bhasin explained that SBI has been insistently restructuring loans of SMEs that are facing temporary cash flow problems. Till now, the bank has instigated restructuring in about 41,000 cases out of the 800,000 accounts. The sectors which had come under high stress due to slowdown in demand and financial crisis are textiles and auto components. At the end of March 2009, the bank’s outstanding SME loan portfolio stood at Rs 1,00,000 crore. SBI for the current financial year, has a target of 24 per cent growth from the segment with main focus on segments such as chemicals and pharmaceuticals.
A bank executive informed, “The garments and auto sectors are showing signs of revival. But developments have to be watched carefully”.
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