Invest In India » State Bank Of India

Bank to disclose defaulters in newspapers

Malvika — Sat, 04 Feb 2012 14:16:12 +0000

India’s largest lender, State Bank of India, will name and shame ‘wilful’ defaulters and will display their pictures in newspapers to get them to pay up.

“The fresh approach will ruffle a few feathers,” the paper quoted a bank executive as saying.

A ‘wilful defaulter’ is one who does not meet payment obligations even when he or she has the funds.

According to the RBI regulation, ‘a wilful default’ would be charged against the borrowers who fail to pay the dues. Even if they don’t channelise the given fund for the specific purpose for which it was availed and divert for some other purpose, they would be considered as defaulters.

Bad loans in the country could jump to as much as 5.8% of the total within two years in a severe risk scenario, up from 2.8 percent in September, according to an RBI report.

The non-performing loan ratio for Indian banks was 2.3% in the last fiscal year.

Till September 2011, the total bad loans for the bank was at the tune of 33,946 crore, as against 23,205 crore in the corresponding period last year.

Such a strong measure has been contemplated against the defaulters as non-performing assets (NPAs) of various banks have been increasing.

Source – Reuters

Indian airlines Industry boom goes downward

Ziaulla Namani — Mon, 26 Dec 2011 06:04:40 +0000

A few years ago Indian airline industry were flying high, but today the scenario is not the same.

Domestic air traffic rose 17.6 percent to 55 million passengers in the first 11 months of 2011, data showed.

That growth has failed to translate into profits for India’s airline industry, where all the major carriers except IndiGo are loss-making, hit by high jet fuel costs and an inability to raise fares in a cut-throat market.

The Centre for Asia Pacific Aviation has forecast a record $2.5 billion to $3 billion loss for Indian airlines for the fiscal year ending March 2012, with state-run Air India alone likely to account for more than half of it.

Kingfisher, which was once India’s second largest carrier by passengers, recorded a market share of 14 percent, ahead only of budget carrier Go Airlines, during the month.

Kingfisher’s market share fell primarily due to less capacity offered in November, the data showed.

The country’s largest airline, Jet Airways, including its unit JetLite, had the largest market share of 27.1 percent, followed by budget carrier IndiGo with 19.8 percent and Air India with a 17.4 percent, the data showed.

Kingfisher Chairman Vijay Mallya said last month that Kingfisher stopped flying on heavily loss-making routes, and the carrier had also grounded some aircraft for fleet reconfiguration after the airline decided to discontinue its low-cost business.

Debt-laden Kingfisher is scouting for funds and is negotiating with its lenders for 7 billion rupees of working capital.

It has debt of about 65 billion rupees owed to a consortium of banks led by State Bank of India.

The airline aims to cut debt to 37 billion rupees through sale and lease-back of aircraft, sale of a property in Mumbai and conversion of rupee loans into foreign loans at a lower interest rate.

Meanwhile, in a major relief to Kingfisher, Subrato Roy has landed a helping and of Rs. 750 cr.

Source – agencies

©2009 Copyright by Invest In India

PSBs extend home loan tenor upto 30 yrs

Ziaulla Namani — Sun, 23 Oct 2011 11:23:18 +0000

Fearing credit turning bad assets in the wake of high interest rates, a number of state-run banks, led by SBI, have decided to raise home loan tenors to 25-30 years or till the borrower touches 70 –well past their working age.

Earlier, the Finance Ministry had written to all public sector banks to increase the tenure of loans instead of raising EMIs in the light of rising interest rates.

State Bank of India took the lead and has reportedly decided to extend the tenor of home loans by 10 years or up to 30 years, while others are doing this on request.

“We have decided to increase the home loan tenure by up to 10 years to 30 years and up to the age of 70, depending on the customer profile. Our Managing Director (S Krishna Kumar), is likely to announce this tomorrow,” a senior SBI official told PTI, requesting anonymity.

Fearing more bad loans in the system as interest rates kept on rising following tight monetary policy being under taken by RBI, the Finance Ministry had recently written to the public sector banks (PSBs) to increase the loan tenor instead of increasing the monthly repayment (EMI) amount.

However, all the banks that PTI contacted for reaction on the issue, said this guideline has been in existence for many years now and they had been implementing it on case to case basis.

Over the past 19 months, RBI has increased policy rate by 325 basis points (one basis point is one-hundredth of a per cent) to 8.25 per cent to batten down stubbornly high inflation, which stood at 9.72 per cent in September.

Generally, home loans are scheduled for 20 years and in some cases up to 25 years, if the borrower will not be retiring by then at 65.

Source – PTI

©2009 Copyright by Invest In India

Discounts on the home loan this season

Ziaulla Namani — Sat, 08 Oct 2011 11:39:31 +0000

This festive season even the banks, like the electronics retail stores, are offering discounts on home loans.

Below are some of the schemes on home loan offered by the banks,

Dual rate scheme

Dual rate scheme fixes the interest rate for first few years and then changes it to the prevailing interest rate. The prime example of this type of loan offered by banks is ICICI Bank. The bank is giving home loans with interest rate fixed for first year and second year.

After the second year, the interest rate charged will follow the prevailing interest rate. The prevailing interest rate will be the base rate plus the premium, which can be anywhere between 0.5 per cent and 1.5 per cent depending on the size of the loan.

Discount on processing fee

This is one of the ways to provide discount on total cost of loan. Punjab National Bank has done away with processing fee completely. This will certainly lower down the cost of home loan by few points.

Concessions on loan

State Bank of India, Dena Bank, and Corporation Bank are giving discount of few basis points for home loan till the end of this year. SBI and Dena Bank have offered discount of 25 bps while corporation bank has offered up to 100 bps discount. Corporation Bank has also waived off 60 per cent of the processing fee.

Progressive monthly instalment scheme

Few banks are providing loans on progressive monthly instalment scheme where the borrower’s liability or EMI is based on increase in salary. Hence the EMI will be lower in first few years and will be regular after the period. Corporation Bank offers this scheme. This scheme is especially good for young people who expect their salaries to rise in future.

Fixed rate for LIMITED PERIOD

This is another addition to the schemes offered by banks to home loan borrowers. HDFC is offering two variants of the scheme. Home loan borrowers can choose either 3 years fixed or 5 years fixed home loan scheme.

Fixed rate scheme

Fixed rate home loan scheme is offered by Axis Bank. This fixed rate will remain fixed for the complete tenure of the loan. This scheme is known as “Nischint”. There is no change in EMI and no surprises. The EMI will be set once and for all. The interest rate is 11.75 per cent.

Due to the rising interest rate scenario, product innovations abound in the market, however borrowers should take care to weigh the pros and cons of the scheme. Finally, borrowers should compare the rates and overall charges from different banks to arrive at the effective cost of the loan and then make their decision.

The general perception in the market is that interest rates are near its peak; it might go up once or twice and then begin a downward trend.

Keeping this aspect it mind, explore the home loan options available with an open mind, especially if you have bagged a good home deal, which could become a lost opportunity, if you failed to latch on to it.

On the other hand, borrowers should do their due diligence and research loan schemes where the interest rate or EMI in the initial years is low.

Borrowers should arrive at a rough estimate of the possible interest rates after the initial years. They should check the base rate, premium over base rate, and historic data on past loan schemes to arrive at this possible interest rate as part of their decision making process.

©2009 Copyright by Invest In India

Banks to be hit by debt laden Inc.

Ziaulla Namani — Sun, 14 Aug 2011 13:33:30 +0000

Weak markets, the global debt crisis and surging interest rates will cripple Indian companies’ ability to raise funds and manage borrowings and could worsen banks’ credit quality.

State-run lenders, which account for 70 percent of the country’s total advances, have voiced concerns over loan-repayment capabilities of borrowers after a rise in bad debts.

ICICI Bank’s takeover of a stake in a debt-laden telecom tower firm is a threatening sign of things to come as India’s slowing economy and slumping shares erode the value of collateral on loans that companies are struggling to repay.

Compounding the problem, founders of several companies have pledged their shares for loans, meaning that as stocks fall, banks are demanding a top-up in security.

More than $33 billion worth of shares have been pledged with banks as collateral, with founders of as many as 17 companies pledging over 90 percent of their holdings, Bank of America-Merrill Lynch said in a June report.

“This is over-leveraging. It’s like a fire. It will hit both the corporates and the banks,” said Jagannadham Thunuguntla, equity head at brokerage SMC Capitals.

Crisil, majority owned by Standard & Poor’s, expects more credit downgrades and defaults for Indian companies in the coming months.

A total of 43 accounts have defaulted in the June quarter, more than a third in the year to March 2011, Crisil said.

Investors have dumped bank shares on concerns of credit quality, slowing growth and lower profitability in a rising interest rate environment.

Shares of Indian lenders including No.1 State Bank of India, ICICI, Bank of India and Union Bank of India have fallen 18-22 percent so far this year, compared with a 13 percent fall in the BSE Bank index.

©2009 Copyright by Invest In India

RBI slaps penalties on 19 banks

Ziaulla Namani — Sat, 30 Apr 2011 12:19:58 +0000

Financial lenders like State bank of India, ICICI, HDFC and Citibank, who failed to comply with RBI instruction of selling derivative products were fined heavily to the tune of 1.95 crore by the country’s Reserve bank.

As per the source, The Telegraph, the banking regulator said the penalties were imposed for failure to carry out due diligence with regard to suitability of the products that the banks had offered to their customers.

It did not give any details about the derivative instruments that the banks had sold.

The banks were also pulled up for selling derivative products to users who did not have risk management policies.

Others were pulled up for failing to verify the adequacy of the underlying asset and eligible limits under the past performance route.

A derivative is a contract whose payoff depends on the behaviour of some benchmark, which is known as the “underlying”.

The underlying is typically a tradable asset, for example, a stock or commodity. The most common derivatives are futures, options, and swaps. The most common derivatives have a market value and are traded on exchanges.

The highest penalty of Rs 15 lakh each was imposed on six banks — Axis Bank, Barclays Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank Ltd and Yes Bank.

Eight other banks were slapped with penalties of Rs 10 lakh each. These were BNP Paribas, Citibank NA, Credit Agriocole CIB, Development Credit Bank Ltd, ING Vysya Bank, the Royal Bank of Scotland, Standard Chartered Bank and the State Bank of India.

Four others — DBS Bank, Deutsche Bank AG, Hongkong and Shanghai Banking Corporation Ltd and JP Morgan Chase Bank NA — were asked to pay a penalty of Rs 5 lakh each.

Meanwhile, buoyed by the decision of Reserve Bank to penalize 19 banks, exporters stepped up their demand for compensation for the losses incurred on account of mis-selling of exotic financial products like forex derivatives contracts by lenders.

©2009 Copyright by Invest In India

Loans to get costlier

Ziaulla Namani — Wed, 20 Apr 2011 06:19:48 +0000

People planning to go for a home or an auto loan just wait and watch.

As per the ENS Economic Bureau, though the Central bank (RBI) of India’s annual monetary policy review is only three weeks away, State Bank of India, the country’s largest bank, has announced a hike in its benchmark lending rates by 25 basis points (bps), making home and auto loans from the lender dearer.

SBI’s benchmark prime lending rate will now rise to 13.25 per cent. The rate hike would be effective from April 25, 2011, the bank said in a statement.

The base rate of India’s largest private sector lender ICICI Bank is 8.75 per cent. The base rate was introduced replacing the Benchmark Prime Lending Rate (BPLR) in July last year to bring in more transparency.

However other financial lenders are waiting till May to get a cue from the annual monetary policy of the RBI.

M Narendra, CMD, Indian Overseas Bank said, “We will wait and watch until the RBI policy before we jump for any decision on these rate issues. On the other hand, I believe that bulk deposit rates are still slightly higher and being a slack season, we do not want to revise the lending rates right now.”

Punjab National Bank’s ED, Mohan Tanksale, said “We have no plan to revise either our base rate which is at 9.5 per cent now or even the BPLR at 13 per cent. I hope credit offtake to be in place before we take any such decision on the rates. We have no plan to revise our deposit rates too.”

“We have no plan to revise either our base rate or even the BPLR. Let the RBI policy come. We have recently moderated our bulk deposit rates and hence we are not looking any further revision in that segment to,” maintained, BA Prabhakar, ED, Bank of India.

The RBI raised its lending and borrowing rates by 25 basis points each to 6.75 per cent and 5.75 per cent respectively in its mid-quarter review in March. The central bank is widely expected to hike key policy rates by at least 25 basis points in its annual monetary policy on May 3.

©2009 Copyright by Invest In India

Affordable housing loan cell by SBI

Ziaulla Namani — Tue, 29 Mar 2011 12:47:33 +0000

As per the PTI news the country’s largest lender State Bank of India, SBI on Tuesday inaugurated its first ‘affordable housing loan‘ cell in Mumbai, which will provide a platform for its customers to interact with the bank.

The bank has initiated this as a pilot project in association with a few builders operating in the affordable housing segment, a press release issued here said.

The first facility has been set up in Nalla Sopara where the bank has its branch, the release 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,” a bank official said.

The demand for affordable houses has not been met due to various reasons, including inadequate supply of houses as well as absence of credible builders in this field, the release said.

To begin with, the focus would be on loans in the range of Rs. 8-15-lakh.

The bank would also provide ATM facility and Internet kiosks at the sites where such cells would be opened, the release said.

Customers would also have the facility of making cash payments after business hours through a customer service point of a banking correspondent at a nearby location, it said.

However, disbursement of loans would be made only through the bank’s branches.

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Salaried taxpayers may get some respite

Malvika — Thu, 20 Jan 2011 01:21:14 +0000

It is reported in Business Standard that salaried taxpayers with no other income option could get a respite from filing tax returns. The income-tax (I-T) department is contemplating of examining a proposal to exempt salaried taxpayers from the annual chore.

Asked whether the department would think about doing away with income-tax returns for employees, who had no other income apart from salaries in a financial year, Central Board of Direct Taxes (CBDT) Chairman Sudhir Chandra said the department would certainly consider the proposal.

He agreed that for a substantial chunk of salaried employees, savings bank interest is the only additional income and that in most cases, this not substantial. This proposal, if approved, will benefit a large section of people and would reduce the I-T department’s workload in a big way.

Of the country’s 35 million taxpayers, roughly half are salaried employees.

The proposal to do away with returns for salaried taxpayers was earlier internally mooted within CBDT a few years ago. The argument in favour of the proposal was that income records for this class of taxpayer were available with both employers and banks.

While interacting with the media Chandra also promised small taxpayers another major relief. He said the I-T department is planning to release all small-value refunds before March 31. “I will ask my officials to give most refunds by the end of the current financial year,” he said.

“We will try to clear most refunds in a month. At least small refunds can be given by March 31,” Chandra added. The newly-appointed chairman said he would communicate this to his officials.

Some of the refunds will be given to taxpayers directly through State Bank of India under the refund banker scheme.

©2009 Copyright by Invest In India

SBI to raise capital of Rs 2000 crore through bonds

Malvika — Mon, 17 Jan 2011 12:09:46 +0000

India’s largest money lender State Bank of India (SBI) is planning to raise up to Rs 2,000 by offering bonds to retail investors in the next month.

SBI Chairman, O P Bhatt, said, “We are planning to come out with the bonds in February after third quarter results are announced.”

SBI’s central board committee members of the bank last month give their consent and approval for raising the capital through bonds.

The board has also given approval for raising Rs 1,000 crore with a green-shoe option.

SBI issued first retail bond worth of 1,000 crore in October, which was subscribed over 17 times on the opening day itself.

The bonds issued in two variants, Series 1 and Series 2 having maturity of 10 years and 15 years respectively, with a face value of Rs 10,000 each. The bonds offer an interest of 9.25 per cent for 10 years and 9.5 per cent for 15 years.

The bonds are not deposits of the bank and are not guaranteed or insured and they may not be used as collateral for any loan made by the bank or any of its subsidiaries or affiliates. Bonds are different from fixed deposits and are not covered by deposit insurance, it added.

Speaking about expectation from forthcoming quarterly review of RBI, , O P Bhatt said the central bank is likely to increase its key policy rates by at least 25 basis points.

The RBI is scheduled to unveil its third quarterly review of monetary policy on January 25.

©2009 Copyright by Invest In India

Six of top-10 firms lose over Rs 42,000 crore this week

Malvika — Sun, 12 Dec 2010 11:58:51 +0000

Press Trust of India has reported that the combined market capitalisation (m-cap) of six of the country’s top-10 firms went down by Rs 42,791 crore during the past week, with two of the country’s top lenders, SBI and ICICI Bank, bearing the maximum loss.

Amid a weak stock market, which fell by 458 points, or 2.29 per cent, last week, the market valuation of State Bank of India also declined by Rs 21,256.29 crore to Rs 1,73,768.19 crore as on Friday’s trade. Similarly, private sector lender ICICI Bank too saw its m-cap diminishing by Rs 7,385.32 crore to Rs 1,28,343.91 crore.

During the last week, SBI’s scrip plunged 10.89 per cent, while ICICI’s tanked by 5.44 per cent on the Bombay Stock Exchange.

Among the top-10 firms, RIL , ONGC, Infosys Technologies and NTPC led the gainers front, while SBI, ICICI, TCS, Coal India , ITC and Bharti Airtel emerged as losers in the list which is decided as per their market capitalisation.

Top private telco Bharti Airtel also saw its valuation eroding by Rs 5,639.31 crore to Rs 1,25,659.94 crore.

IT major TCS too lost Rs 3,933.97 crore from its m-cap which stood at Rs 2,10,467.5 crore.

With an m-cap of Rs 2,00,039.12 crore, coal behemoth CIL witnessed an erosion of Rs 3,537.16 crore from its valuation.

FMCG honcho ITC also lost Rs 1,039.36 crore from its kitty to take its m-cap to Rs 1,30,919.79 crore.

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Bounced cheque may lead to the closure of your bank account

Malvika — Wed, 13 Oct 2010 10:04:07 +0000

Take extra caution before writing a cheque. Country’s largest money lender State Bank of India (SBI), is planning to close the account of those customers who release a cheque without adequate fund in their account.

SBI believes that this step will reduce the bounced cheque issue.

This is the step, which other banks may also follow sooner or later.

In an internal communication, SBI issued a circular to block the account of those individuals, who issued check, which bounced for 4 or more times in a fiscal year.

Senior person of the Indian Banking Association (IBA) said, “Other banks, both public and private, may soon follow as the issue has been informally discussed amongst public sector banks.”

He further said that this move will bring financial discipline among the banking customer. A month’s time will be given to the customer to settle, before closing the account.

The details of the closed accounts will be circulated among the banks and the institute that maintains the credit score. The defaulters will find it difficult to avail the financial services.

Reserve Bank of India allows banks to hold new cheque books request of those customers who have had their four cheques of Rs 1 crore, or more, bounced due to insufficient balance in their account.
In the year 1989, cheque default was made a penal offence. The Supreme Court had also issued a statement that any delay in settling bounced cheque case will cost the defaulter up to 20% of the cheque amount.

There are over 30 lakh cheque bounce cases pending in the court.

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USE, a new stock exchange to be operational from today

Malvika — Mon, 20 Sep 2010 09:19:54 +0000

United Stock Exchange of India(USE) a new stock exchange for currency derivatives is expected to commence operations on Monday, September 20, 2010.

It is the fourth pan India exchange to be launched for trading financial instruments in India over the last 140 years.

USE has received final approval from the market regulator SEBI to start currency futures trading. USE represents the commitment of all 21 Indian public sector banks, private banks and corporate houses to build an institution of standing.

USE will be inaugurated by Securities and Exchange Board of India (SEBI) Chairman, C B Bhave, and Reserve Bank of India’s Deputy Governor, Shyamala Gopinath, at Bombay Stock Exchange (BSE) on Monday, an exchange official said.

USE also has Bombay Stock Exchange as a strategic partner and holds a 15 per cent stake and all its members are connected to the new USE platform.

Public Sector Banks that are stakeholders of USE include Allahabad Bank, Corporation Bank, Punjab National Bank, Andhra Bank, Dena Bank, State Bank of India, Bank of Baroda, IDBI Bank, Syndicate Bank, Bank of India, Indian Bank, UCO Bank, Bank of Maharashtra, Indian Overseas Bank, Union Bank of India, Canara Bank, Oriental Bank of Commerce, United Bank of India, Central Bank of India, Punjab and Sind Bank, Vijaya Bank. Private Sector Banks like Axis Bank, Federal Bank, J & K Bank, HDFC Bank. Corporate Institutions such as Jaypee Capital, MMTC and India Potash are also associated with United Stock Exchange.

USE would begin operations in the future contracts in currency pairs allowed by the SEBI namely, United States Dollar-Indian Rupee (USD-INR), Euro-Indian Rupee (EUR-INR), Pound Sterling-Indian Rupee (GBP-INR), Japanese Yen-Indian Rupee (JPY-INR).

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Innovation by SBI: Banking through kiosk

Malvika — Fri, 17 Sep 2010 11:56:54 +0000

State Bank of India (SBI), the biggest money lender of the country, is coming up with various strategies to fulfill the needs of population.

Recently it was in the news for inaugurating ‘crorepati only’ branch and now SBI has started one more venture.

It has come up with a plan, with which it aims to bring banking services to under-banked sections of the society through the use kiosk.

SBI has started offering banking services through kiosks set up at kirana or grocery stores and other small businesses, where customers can open an account, deposit cash, withdraw or transfer money, and get a valid receipt for the transaction.

The bank has opened the first 50 kiosks in Mumbai, including one in Dharavi, as well as 30 in Delhi.

SBI aims to open around 1,000 such kiosk in and around Mumbai. It has already opened another 870 kiosks across the state.

By October 2010 the kiosks will be operational in UP and Bihar as well.

In collaboration with Oxigen, a bill-payment, mobile recharge and ticketing systems provider, the bank has opened the kiosks.

Other Bank to follow the innovative idea is Bank of India; others will join sooner or later.

The SBI kiosks provide banking services six languages. A person can and open a no-frills account with simply walking in at any such kiosk, without the mandatory proofs of identity and residence as necessary to open an account a normal bank branch; nor is it mandatory to maintain a minimum balance.

The shopkeeper will take a photo of the person also fingerprints with a biometric device.

So, if you do not have an address proof just show your current place of residence, which can serve as an address proof.

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Rs. 1 crore to open an account with SBI

Malvika — Sat, 04 Sep 2010 13:23:23 +0000

After extending the service to urban middle class and rural poor State Bank of India (SBI) is now aggressively targeting the millionaires of the country.

This move by the bank is to shed its PSU image. By this move it has it taken straight fight with other foreign and private banks.

After the scheme of ‘One Rupee Bank’ account for poor, SBI, the biggest bank has opened first-of-its-kind branch for high networth individuals (HNIs). The Bank has open has inaugurated its first branch for HNIs in Hyderabad on September 2 and it takes Rs. 1 crore to open an account, and that too on an invitation only.

However money is not the only criteria, the individual interested in opening an account has to undergo a tough application process.

The first ‘Crorepati Only’ branch is named after the Kohinoor diamond that was found here. ‘Kohinoor Banjara Premium Banking the swanky branch, spread over 4,000 sq ft, will see SBI roll out the red carpet for Hyderabad’s nawabs, nouveau and old. It will offer them specialized banking facilities like personalized relationship managers, 24/7 lockers, extended banking hours, doorstep pick-up and drop facilities, in addition to pampering with five-star amenities at the branch
In an interview to PTI, SBI Chief General Manager Shiva Kumar, said “We have opened as many as 50 accounts so far. We are confident of opening another 150 by the end of the current fiscal.”

Diwakar Gupta, Deputy Managing Director, SBI, said while the bank has over 150 branches catering to HNIs, this centre is based on a different concept.

According to bank officials, an attractive feature of the branch is its lockers. “They are open 24 hours. People can come anytime and take or keep their jewellery and other valuable items. We have special dressing rooms for customers. These will be useful for late night function goers as they would not have to take the valuables home.”

©2009 Copyright by Invest In India