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Apr 15, 2009

SBI mulls further cut in lending rate

State Bank of India (SBI) said that it was examining the possibility of another round of reduction in its benchmark prime lending rate (BPLR), while adding that it was offering the cheapest rates across loan categories. At the same time, the bank’s chairman OP Bhatt told that funds mopped up at higher rates between October and December, and lower credit demand, were putting pressure on SBI’s net interest margins. “In the fourth quarter, NIM (net interest margin) would have dropped to around 3 per cent, from 3.16-3.17 per cent earlier. But we are hoping to keep it at around 3 per cent during the current financial year… Any small variation in margins has a large impact on the balance sheet,” he said.

Bank of India cuts deposit rates

Bank of India has cut deposit rates on domestic rupee term deposits by 25 to 100 basis points, across various maturities, with immediate effect. The revised interest rates will be applicable only on fresh deposits and on renewal of maturing deposits with effect from April 15. The bank also waived the penalty on premature withdrawal of all domestic rupee term deposits with effect from December, 2008, irrespective of date of deposit and amount

Debar loan defaulters from contesting elections: AIBEA

Should wilful defaulters of bank loans be barred from contesting Parliamentary elections? All India Bank Employees Association (AIBEA) has moved the Election Commission of India (ECI) to debar such candidates from contesting the general elections. It underscored the fact that the raw material for making loans to borrowers comes from depositors (public money) and it is important that recalcitrant borrowers who are in the fray be reined-in. Pointing out that banks and notified financial institutions report the details of wilful defaulters with outstandings of Rs 25 lakh and above to the Reserve Bank of India on a quarterly basis, Mr Vishwas Utagi, Secretary, AIBEA, said the Election Commission can easily filter out candidates who have been declared wilful defaulters by banks, by referring to the RBI’s list.

Rating agencies, banks differ over loan defaults

Bank loan rating, as per Basel II norms, is proving to be a bone of contention between rating agencies and banks. While credit rating agencies do not brook even a day’s delay in loan repayment, it is normal practise for banks to give companies the long rope of 90 days after the expiry of the due date when it comes to recognising a default The issue has come to the fore with Basel II norms on capital adequacy for banks kicking in from April 1. Under these norms, all corporates with borrowing of more than Rs 10 crore must be rated. As per RBI guidelines, from April 1, 2009 onwards all fresh sanctions or renewals in respect of unrated corporates that have bank loans of more than Rs 50 crore, will attract a risk weight of 150 per cent. This would push up capital costs for banks. On the other hand, exposures to corporates that have quality ratings would entail much lower risk weights, between 20 and 100 per cent, depending on the rating. This would result in ‘capital relief’ for banks.

RBI for ramps at ATMs, banks

In a move to make bank ATMs more disabled-friendly, the Reserve Bank of India has asked banks to provide ramps at ATMs and bank branches so that they can be accessed easily by the handicapped RBI has also asked banks to ensure that the height of the ATM should be such that it can be accessed by a wheelchair user. The central bank has also asked the banks to ensure that at least one-third of the new ATMs installed are talking ATMs with Braille keypads. It has advised banks to place the ATMs in consultation with other banks to ensure one such ATM is available in each locality.

PNB ties up with SMC, Networth Stock Broking for online trading

Punjab National Bank (PNB) on Monday entered into a tie-up with SMC and Networth Stock Broking Ltd, two brokerage houses, to provide online trading services in equities, commodities and mutual funds among others to its customersThis alliance would give a “3-in-1 account offering” comprising of savings account, demat and trading account together. PNB Chairman & Managing Director, Dr K.C. Chakrabarty, said the bank aims to have 15 crore customers in the next five years from the current level of about 3.8 crore. “Of this 15 crore customers, we hope at least 20 per cent of them would trade in equities through our e-trading facility. We want more of our customers to invest in equities and hence this alliance.”