SBI, PSBs likely to further cut rates

After a meeting with Finance Minister Pranab Mukherjee SBI chairman O P Bhatt briefed reporters about the possibility of public sector banks led by State Bank of India (SBI) will look at further interest rate cuts. He told that the bank is thinking of cutting its prime lending rate (PLR) for the second time in as many months.

Earlier on January 1 SBI had cut PLR 75 basis points to 12.25 per cent and has also cut all new home loan rates to 8 per cent for a limited period with a clause to reset rates after one year.

Finance Secretary Arun Ramanathan notified after public sector bank chiefs met Mukherjee, “Since deposit rates have come down, there is a general expectation that interest rates will come down”.

Kolkata-based UCO Bank Chairman S K Goel told the bank might cut lending and deposit rates 200 basis points, with a 100-basis-point reduction possible this month. The bank soon will be launching a scheme similar to SBI’s.

United Bank of India informed that it will cut its PLR 50 basis points soon.

While Punjab National Bank and Bank of India informed they will be cutting interest rates after inflation dips further and Bank of Baroda and Bank of Maharashtra said they will review the rates after a fortnight. Canara Bank also seems to cut down lending rates for all sectors.

Mukherjee pointed out the government will focus on boosting domestic demand. “In view of contracting global demand, we have to focus on domestic demand by primarily stimulating demand in the rural areas and highly labor-intensive sectors,” he said.

The banks have been advised to increase credit to productive sectors like infrastructure, small and medium industries and textiles, among others.

On the other hand since September last year with an aim to boost the economy, the Reserve Bank of India (RBI) has taken a series of measures including cuts in the cash reserve ratio and the repo and reverse repo rates to inject liquidity into the system and signal a soft interest rate regime.

But last week RBI said banks can reduce rates further. However since November, public sector lenders have reduced lending rates up to 200 basis points, while private banks have lowered rates 50 basis points. In comparison to this, deposit rates have been reduced up to 300 basis points.

Bankers are not willing to cut lending rates further as they claim that the cost of deposits has not come down significantly. They told further cut in deposit costs will result in investors shifting to small savings schemes such as post office deposits and public provident fund, which offer 8 per cent returns.

SBI to review on rate cuts in ALCO meet

State Bank of India (SBI) Chairman O P Bhatt while indicating at interest cut in the near future notified that although several banks have cut down their rates in the recent past but these have not been done in a uniform way and across the industry.

He informed the reporters, "In the past 2-3-months, there have been some rate cuts by banks but these have not been across the industry and not uniform."

He pointed out there are possibilities that banks might cut rates around March, and added that there is enough liquidity in the system.

When asked about more cut in PLR and other interest rates by SBI, Bhatt pointed out that its "asset-liability committee (ALCO) meets every week" and would look into the matter.

Bhatt further stated, "We will factor in the policy inputs" along with other factors (while taking a decision on its rates).

He stated SBI is amongst the first banks to reduce its prime lending rate (PLR) as also its deposit rates.

He informed, "SBI reduced its deposit rates by 1.50 per cent".

SBI awarded 2 IBA Award

State Bank of India has bagged two prestigious awards from Indian Banks Association namely "RURAL BANKING INITIATIVE "AND "BEST IT ARCHITECTURE". The award was given on 20th January 2009 in the IBA & TFCI's 5th Annual Banking Technology Awards function, 2009 held at Mumbai.

SBI is having a network of 4261 rural branches in Rural Banking Initiative, which is a astounding 38% of its network. All these branches including diverse geographical terrains- some in the hilly and mountain raven regions like Leh at an altitude of 13000 feet above the sea level are on Wide Area Networking Platform. One of the Bank's aims is to offer service even in the remotest part of the country. In alliance with this acknowledged objective, the Bank is setting up another 1000 new branches in rural and semi-urban areas before March 2009.

In IT Architecture, State Bank of India (SBI) which is largest premier financial institution in India having a network of 11,500 branches and an additional 4600 branches of its associate banks spread across India has upgraded its IT Architecture by getting on an ambitious Core Banking System (CBS) implementation with an aim of connecting all the branches that will serve to 150 million plus accounts with a daily transaction volume of 25 million plus transaction per day. The environmental friendly feature of SBI's CBS architecture has allowed flawless edge with other IT initiatives like ATM, Internet Banking (both retail and corporate), Payment Systems (NEFT, RTGS, SWIFT, ECS, and EDI), Government Business, Financial inclusion, Treasury and Foreign Exchange.

SBI associates merger plans put on hold

State Bank of India (SBI) is taking steps more cautiously while progressing with the planned merger of its six associate banks with itself. SBI chairman OP Bhatt said at present there are no further merger plan on the cards. Recently SBI completed the merger of State Bank of Saurashtra (SBS) with it and post-merger integration is still on.

On being asked about the merger of other associate banks with SBI Mr Bhatt said “Nothing is on the cards.” This is clearly a huge move what the SBI top management used to project on the issue of merger till now.

Earlier SBI management was planning to take steps for merger of State Bank of Patiala and State Bank of Hyderabad with the parent bank. In the meantime, the Union government has started preparing the platform for merger of State Bank of Indore and State Bank of Patiala with SBI. These plans have been delayed.

As per bank insiders information, at present the focus is on tiding over the ongoing financial crisis and economic recession. Therefore, issues like mergers would be taken up later when things get in a better position.

SBI’s merger of all its associate banks with itself is a long-term plan, is to strengthen its presence. After the SBI-SBS merger, SBI has six associate banks in line — State Bank of Patiala, State Bank of Hyderabad, State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Indore and State Bank of Travancore.

According to the SBI chairman the employees of the banking group have now developed a positive attitude towards mergers. This is in spite of the fact that SBI’s employees’ associations have been protesting against the merger. However its associations had supported the SBI-SBS union.

Currently, the bank is busy incorporating its bank operations after the SBI-SBS merger. Mr Bhatt informed the post-merger rationalization will be in the areas like technology, asset management, branch banking and seniority. The chairman is of view that this experience can help the country’s largest banking group in preparing for the proposed mergers when these transpire.

In the meantime, SBI has merged its Mauritius-based subsidiary, Indian Ocean International Bank (IOIB), with SBI International (Mauritius) to strengthen its operations in the African island nation. The new unit has started its operations as SBI (Mauritius).

SBI registered 10% hike in auto loan demand

In Chennai the State Bank of India (SBI) and other nationalized banks have made possible the December sales major auto players after most of the private sector banks have stopped auto loans which led to decline in auto sales.

Official sources informed Express, “SBI registered a 10 per cent hike in loan demand in the metro in December, compared to the rest of the year. Normally, on an average, we receive 25 applications for loan demands per day”.

This was followed by the Cenvat cut of four per cent by the Centre and resultant decline in discounts by car majors fueling demand.

Private Banks had cut down their auto loan segments by almost 35 to 40 per cent have also contributed to the PSU bank’s lending.

Sources said, “SBI sanctioned and disbursed 372 vehicle loans totaling Rs 12.32 crore to customers of Maruti Suzuki, Hyundai Motor India, Toyota, Tata Motors and others in Chennai during this month”.

Thus the most beneficiaries of the lion’s share were Maruti customers at 30 per cent of the total disbursements and Hyundai at 25 per cent. Other vehicle manufacturers brought up the rear.

Besides this the bank did not rejected any loan demand during this month as compared to its customary five per cent rejections each month. Though, it is believed that 10 per cent applications have been returned due to lack of proper documentation.

In the meantime, the banking organization is expectant of another downslide in interest rates by 0.5 per cent in January that would further boost their loan segments.

On the other hand SBI also saw a dip in auto loan demands by 30 per cent in FY’ 09, vis-à-vis FY’08. This is due to high interest rates for auto loans prevailed till uneven a couple of months ago. As 75 per cent of the industry’s sales is dependent on bank financing for vehicles, sales were hit during the year.

SBI website was shutdown due to attempt by hackers

On Saturday State Bank of India’s (SBI) website was shutdown due to attempted attack by hackers. A senior official confirmed “There has been an attempt to disrupt the system.” But he refused to reveal any further details. Bank’s internet banking site www.onlinesbi.com was operational, but its sites www.statebankofindia.com and www.sbi.co.in were down on Saturday.

Lately in the evening, officials stated that the bank was aiming to get its website operational by 9.00pm. Afterward the bank put up a message stating that site was under maintenance and directed online applicants to clerical positions to the Institute of Banking Personnel Selection site.

State Bank of India is the country’s largest bank and is having over three million online customers. There has been increase in the number of people with access to internet banking has increased dramatically after SBI has installed its core banking solutions in over 11,100 branches across the country. In the past also, government website was attacked by hackers who left behind anti-India slogans.

In the previous year Bank of India’s website was hacked by the hackers who planted malaware on the site that installs itself on the user’s computer and transmits sensitive information to the hacker. Moreover there have been phishing attempts on customers of various banks where the hacker puts up a website identical to that of a bank to steal passwords.

On Saturday, the bank has launched a railway ticket booking facility at internet kiosks at ATM centers located in railway stations. With this all online banking customers will be able to get printed electronic reservation slips instantly through the kiosks. The kiosk can also be used for other internet banking transactions as well.

SBI likely to hire 500 ATMs to reduce capital expenditure and improve capital service

The State Bank of India (SBI) is likely to hire 500 ATMs from external agencies to reduce capital expenditure and improve capital service; this was reported by government sources.

Minister of State for Finance P.K. Bansal stated in a written reply in Lok Sabha, “It would be done on a pilot basis to reduce capital expenditure in setting up ATMs and to improve availability of ATMs to customers”.

“Besides, it will improve the quality of customer service,” he said adding: “The process of site identification for installation of ATMs has begun.”

According to the information available on the website of the bank, SBI is having over 8,500 ATMs in India, the largest network in the country.

Replying to another question, Bansal said that there is no recession in the economy.

Although in the situation of the global financial crisis, the government with a view to safeguard the growth process has announced fiscal incentive measures on 7 December.

He pointed out that there is no fiscal crisis or destabilization of markets in India.

About problems faced by investors while putting money in the initial public offer, Bansal stated that some of the problems and risk identified are related to disclosures in offer documents, non-receipt of shares after allotment, delayed receipt of refunds, non-receipts of refunds etc.