SBT extended home loan scheme, withdrawn car loan scheme

The State Bank of Travancore (SBT) has also extended its Aishwarya Home Loan scheme till March 31, 2010, and has reintroduced processing charges.

Under this scheme the home loans taken during this period will be offered at the rate of 8 per cent (fixed) during the first year, then for the next two years the rate would be 9 per cent (fixed) on up to Rs 30 lakh and for the next two years it would charge 9.5 per cent (fixed) for above Rs 30 lakh.

According to bank press release, subsequently the interest rates for these loans after wards will be at 2.5 per cent below prime lending rate (floating) for limits up to Rs 30 lakh and at 2 per cent below prime lending rate (floating) for limits above Rs 30 lakh.

For the time being SBT has withdrawn its Aishwarya Car Loan scheme from December 1, and consequently the SBT Car Loan scheme will be available at normal rates with processing charges. The normal rates of car loan scheme charged by the bank range from 11 per cent to11.25 per cent for a tenure of up to seven years, the release stated.

SIB authorized to distribute commemorative coins on St Alphonsa

Recently the commemorative coin on India’s first woman Catholic Saint Sister Alphonsa was released by the Union Finance Minister Mr P. Chidambaram. Sister Alphonsa, who spent a quiet life at a convent in Bharananganam village in Kottayam district in the early 20th century, was conferred sainthood by Pope Benedict last year. South Indian Bank (SIB), a Kerala based lender has been authorized to distribute the coins through its branches.

The Rs five coin has the engraving of the Kerala – born nun. The distribution of coin was inaugurated at SIB headquarters in Thrissur where Dr V.A. Joseph, Managing Director and Chief Executive Officer of SIB presented few pieces of coin to Archbishop Andrews Thazhath, a bank press release stated.

The Provincial of Assisi Province of Franciscan Clarist Congregation received the coins; St Alphonsa belonged to this place.

State Bank expects growth in loan segment and increase in margins

Country’s top lender, the State Bank of India is expecting growth in its loan segment and margins to increase as more and more corporate are showing confidence in Asia's third largest economy which will boost in credit demand.

On Saturday, the state-run lender September quarter net profit raised by 10.2 percent taking to 24.9 billion rupees ($530.2 million) on trading gains, while there was slip in loan demand and low lending rates from core operations.

However Reuter survey of analysts had forecasted net profit at 24.6 billion rupees.

While on Friday ICICI bank the closest rival said, their net profit has increased to 2.6 percent, defeating the forecast.

It is said the increasing business confidence in Asia's third-largest economy is likely to boost the corporate, housing, auto and retail loan demand which will help Indian banks to retrieve their loan growth.

SBI Chairman O P Bhatt told reporters, "Loan growth was slow until June. After that it has picked up significantly and if the rate of growth continues we should be able to meet our targets".

in July-September there was a growth of 16.4 percent in advances, covering its 30 percent flow over the past few years but more than 13 percent sector growth, stated State Bank. The State Bank along with its associates has hold over a quarter of Indian bank loans and deposits.

Bhatt stated, it is likely to attain credit growth of 22 percent in the year of March 2010.

In the September quarter, most Indian corporate has done good earnings, which reduced the risk of rising bad debt for Indian banks.

State Bank has 12,000 branches across India and abroad, and its bad debts is estimated to have risen to 2.99 percent in the fiscal second quarter as against 2.79 percent in the June quarter.

Also its provisions for bad debts had declined to 42.9 percent in July-September as against last quarter’s 45.2 percent.

According to Analysts State Bank and ICICI Bank will be affected most by the measures taken by the central bank to raise the minimum provision ratio for bad debts to 70 percent from 10 percent by September 2010.

In view of RBI’s move the bank will be required to provide at least 50 billion rupees more to meet this target, Bhat said he is waiting for details from the RBI.

Bank there was growth of 2.55 percent in net interest margin in the quarter to September as against the 2.3 percent in the previous quarter.

The bank hopes net interest margin to push up by 10 to 15 basis points in the next few quarters as it is increasing low-cost deposits and cutting high-cost term deposits
on the other hand bank’s capital adequacy ratio, a measure of its financial efficiency was at 12.47 per cent which stood at 12.14 percent a year ago.

State Bank of India will require about 360 billion rupees over the next 5 years so that it can maintain its capital adequacy ratio of 12 percent, said Chief Financial Officer S.S. Ranjan.

Bhat informed the process of acquisition of State Bank of Indore is on track and the board has given its approval to the share swap ratio, but he refused to reveal the details.

State Bank sources said it is looking at overseas acquisition opportunities in order to strengthen its portfolio.

Bhat referring to the global credit crisis stated, "We are looking at it but in the current climate it is difficult. If you make a mistake it won't be good for us in the context of what has happened across the world".

State bank is getting tenth of its profits from its overseas operations.

In July-September shares of State Bank prized at $31.5 billion rose by 26 percent, beating a 20 percent rise in the sector index and an 18 percent gain on the benchmark index.

SBI ATM failed to dispense cash, paid compensation to a customer

The State Bank of India was directed by the District Consumers’s Forum to pay Rs 3,000 as compensation to a customer as an automated teller machine (ATM) of the bank could not provide him cash.

Forum President Iqbal Ahmad said, "The compensation must be provided to Mr Rajesh Kapale in a month".

Kapale resident of Noniya Kardal has an account at the local SBI branch. On February 10, 2009 tried to withdraw Rs 15,000 from the ATM but machine dispensed a slip mentioning that the transaction could not be processed. Kapale had adequate funds in his account.

He wrote a letter to SBI officials but did not obtain any response.

The Bank agreed that on February 10 the ATM was non-functional for some hours and Mumbai was alerted about this.

SBI, LIC proposes to introduce Islamic products

Senior officials of the State Bank of India (SBI), country’s largest lender and Life Insurance Corporation (LIC), the largest insurance company, informed that the two firms are planning to introduce Islamic products to tap the investment habits of Muslims in the country.

Following this the SBI officials over the past few days have been meeting top experts in the field while a team of LIC officials has been set up to study these products. The Reserve Bank of India recently conducted a study and reached to a conclusion that it might not be possible to include Islamic banking in the current regulatory structure in the country.

However LIC chairman TS Vijayan told ET the corporation has set up a team to study Takaful, the insurance equivalent of Shariah-compliant Islamic banking. Through insurer’s representative office in Singapore the product will be offered to cater the Malaysian and Indonesian market.

Mr Vijayan informed, “We have put a team to study Takaful products. We are looking at this product for our Saudi operations where Takaful is coming up”.

At SBI the process is in the preliminary stage. SBI deputy general manager, overseas expansion and planning, Naresh Malhotra told, “We have been studying the feasibility of launching Islamic banking in terms of the products that can be offered and the systems that need to be put in place”. He along with a team of officials at the International Business Group, have been meeting several experts to study the legal and regulatory obstructing from launching Shariah-compliant products.

SBI is the latest entry in the growing list of firms which are trying to get hold on the investment habits of around 142 million Muslims in the country. However, over the past few months, two mutual fund schemes have been launched which are operating on a Shariah-compliant basis. Two more insurance companies have launched special pension fund schemes. Recently the Kerala government has also announced that it is thinking of setting up a Shariah-compliant NBFC, capitalized at Rs 1,000 crore.

Mohammed Hussain Khatkhatay, noted expert on Islamic banking pointed out, “Islamic banking could be introduced by effecting changes through notifications of RBI and without a change in law”. He added that for this strong political will is required from the government side which might be difficult to bring about.

Regarding this recently RBI constituted a working group under the chairmanship of Anand Sinha, an executive director. The group in its report stated that it is not possible to introduce Shariah-compliant instruments in the current regulatory structure.

SBI’s business per employee lower than industry average

According to RBI report for the year 2008-09 the productivity of the State Bank of India’s employee stood at Rs5.56 crore which is below the estimated industry average of Rs7.50 crore for the year.

While the country’s largest lender’s wages as percentage of total expenses accounted to 16.64% as against the industry average of 13.52% for 2008-09.

As per the RBI report on profile of banks, business per employee (total business of the bank divided by the number of employees) of IDBI Bank stood at Rs20.30 crore and that of Punjab National Bank at Rs6.54 crore.

While the business per employee of Canara Bank stood at Rs7.80 crore, Bank of Baroda at Rs9.14 crore, Bank of India at Rs8.33 crore and Union Bank at Rs6.94 crore for 2008-09.

In comparison to public sector banks, country’s private sector banks have done fairly well with the business per employee of ICICI Bank and Axis Bank being at Rs11.54 crore and Rs10.60 crore, respectively for the last fiscal.

Also the foreign banks’ employee productivity has been higher in comparison to the industry average with Citibank, HSBC, Standard Chartered Bank and Barclays business per employee at Rs18.80 crore, Rs9.61 crore, Rs9.71 crore and Rs11.10 crore, respectively.

ICICI Bank’s profit per employee has been higher at Rs 11 lakh, among the private lenders while the HDFC Bank average has stood below at Rs 4.18 lakh.

SBP announced Festival Bonanza- offers 3 new home loan schemes

There is a competition among the banks of offering best festive offers. The State Bank of Patiala has launched a Festival Bonanza with 3 new Home Loan schemes on liberal terms and conditions. According to bank’s press release the schemes will be applicable from September 1 to November 30, 2009. The release said the schemes have been launched to cater the customer’s need for attaining home loan at affordable rate of interest.

Under HI-Five Home Loan scheme SBP is offering a fixed rate of interest at 8% p.a. for 5 years for the loan of up to Rs.5 lacs. The loan repay back period has been set for 10 years. Under Easy Home Loan scheme SBP is offering a fixed interest rate of 8% p.a during 1st year 8.50% for 2nd and 3rd year. The maximum loan amount under this scheme is Rs.50 lacs and maximum repay back tenure is 25 years.

While under Advantage Home loan scheme SBP is offering 8% p.a interest for 1st year and 9% p.a. for 2nd and 3rd year. The scheme will be offered on above Rs.50 lacs for the period of 25 years. The bank will not charge any pre-payment penalty in case the borrower opts to pre-pay the loan at the time of reset in all variants. Processing fee has also been completely waived off up to 30.11.2009.