SBI tops ATM expansion in non-metros: Assocham

Mumbai, September 19: Country's largest lender State Bank of India (SBI) is more aggressive in expanding its ATM (automated teller machine) network in the non-metro and semi-urban centres as compared to its peers, according to a study by Assocham. "Unlike other banks, the State Bank of India (SBI) is expanding its ATM network in non-metro and semi-urban centres, faster than expansion in the metros," the study based on the recent Reserve Bank data said. As compared to the 5,783 ATMs in metro cities, SBI has 7,511 and 6,419 ATMs in non-metro urban areas and semi-urban areas, respectively, the Assocham statement said.
SBI's peer in the state-run banks space, Punjab National Bank is the only other bank which has more ATMs in non-metro cities than the metros, it said. The objective of financial inclusion can be better achieved by the usage of technological interventions, including ATMs, and public sector banks have an important role to play in the objective, Assocham Secretary General D S Rawat was quoted as saying.
Overall, the private sector banks, led by Axis Bank have gone about expanding their network through ATMs in a much more aggressive way than their public sector peers.  Be it, ICICI Bank, Axis Bank or HDFC their bias and preference for ATMs is for the metro cities, followed by tier two cities.Among the private sector banks, Axis Bank has the largest (10337) ATM network, followed by HDFC Bank with 9709 such machines and ICICI Bank - 9366 ATMs.
Excepting the SBI, the other banks have to go a long way before achieving the financial inclusion in the semi-urban and rural areas.
“The Finance Ministry is rightly very keen of achieving the financial inclusion of a large number of people in rural areas.  This can best be achieved by leveraging of technology and use mobile telephony and ATMs. Somehow, the public sector banks will have to take a lead in these areas. Even their brick and mortar branch network is wider in the rural and semi-urban areas than the private sector banks,” ASSOCHAM Secretary General D S Rawat said.
He said while a good beginning has been made, pooling of technology resources like the ATMs should be encouraged so that optimum use can be made to the advantage of the people. The ASSOCHAM quoted honourable Finance Minister Mr P Chidamabaram who recently noted how even the trade has not been fully brought into the banking network.
“As was pointed out by the Finance Minister, today traders are not able to deposit their cash of sales proceeds at night in any bank. In the process, they have to keep it either in the shop premises or at home taking the risks of theft and other insecurity issues. We must have technology-driven day and night banking so that a wider section of the informal economy is brought into the banking network,” Mr Rawat said. While the RBI has been expressing concerns over regulatory issues over the mobile banking, sooner or later different technology platforms have to converge and the regulators need to equip themselves to deal with new challenges and opportunities.
The ASSOCHAM said a large number of Indians still remain outside the banking network.  It is because of lack of the organized banking that the gullible people in semi urban and rural areas fall prey to unscrupulous money-lenders. “The institutions of micro-finance did make a good beginning. However, because of certain corporate governance issues, the entire experiment has become rather overshadowed by controversies. The use of technology to reach out to the bottom of the pyramid promises a lot of scope,” the ASSOCHAM Secretary General said.

ICICI, HDFC Bank follow SBI; revise FD rates by up to 0.5 pc

Mumbai, September 12: Private sector banks like ICICI Bank and HDFC Bank on Wednesday reduced interest rates on fixed deposits by atleast 50 basis point. The reduction in deposit rates comes at a time when the economy is slowing down and credit pick up is slack. One basis point is equal to one hundredth of a percentage. Last week, State Bank of India had reduced interest rate on deposits by as much as 100 basis points across maturities to maintain profitability after lowering lending rates.

 

ICICI Bank has cut rates across maturities ranging from 91 days to less than five years. It now offers a maximum 8.75 per cent interest on retail term deposits compared to 9.25 per cent earlier. In the shorter tenure ranging between seven days to 45 days, however, the bank has increased rate by 50-75 basis points. A reduction in statutory reserve ratio, the amount of funds to be held in government bonds, by a percentage point is also help the banks lend Rs 15,000 crore more to corporate or retail customers. Deposits grew 14.1% year on year against RBI's projection of 16%.

 

Pratip Chaudari, chairman State Bank of India had said, “As of now, we are surplus in deposit for SBI. The challenge is more on pushing credit.” Also, the cut in SLR is providing some comfort. This is helping banks in meeting the credit demand, which is climbing marginally. Recent RBI data shows that credit has grown 16.7% year on year.

 

‘We could see the private players now reduce lending rates to get competitive as many public sector banks like State Bank of India and Andhra Bank have cut rates on select retail products,’ said a banking analyst with a domestic brokerage. ICICI Bank is also doing this to maintain a healthy margin of over 3%, he added.

ICICI Bank to add Facebook as Transaction Platform

Hyderabad, September 5: ICICI Bank will soon add another online platform for dispensing its banking transaction services — Facebook. The country’s largest private sector lender was the first bank in India to use the social media site to provide services such as account enquiry and request for cheque.  Now it is preparing to take this initiative one step forward by offering transaction services, such as deposit or transfer of money, to its Facebook customers. This is part of its efforts to provide next-gen banking solutions, in line with its ‘Khayaal Aapka’ (your care) philosophy.
Next-Gen solutions: It has recently added tablet banking and e-locker services to its range of technology products such as Internet and mobile banking. E-Locker is a virtual online locker, which can be used to safely store electronically scanned copies of important documents in various formats. Mukesh Kumar Jain, the bank’s Chief Technology Officer, said the bank was working on this technology and indicated that it could come out with this new service in the next few months.
Social media channels will, in the near future, form an important platform for banking services, he told media-persons here today. He was in the city to launch the bank’s electronic branch, Tab Banking and E-Locker services, as part of the bank’s nation-wide rollout of next-gen banking solutions.
Security issues: In response to a question, Jain said security was not a challenge in offering transaction services through the social media platform. He said this platform will not only make it easier for customers to make use of bank services but will also help the bank expand its customer base.
Jain said although mobile banking customers formed a small group today, two-thirds of the bank’s transactions were being done through ATMs and the Internet. He said the ICICI Bank page on Facebook already has seven lakh fans. A recent study by global consultancy major KPMG had revealed that businesses in India and other emerging markets are using social media platforms more than their developed market peers to expand customer relationships.

Self-service banking gaining currency

Mumbai, August 26: Banks are increasingly launching self-service banking in the front lobby of their branches to increase customer convenience and reduce transaction time and costs.
Self-service banking in the front lobby of branches enables customers to use alternative banking channels — ATMs, phone banking, cheque deposit machine, and pass-book printer — without entering the branch, any time of the day, irrespective of whether the branch is open or closed.
The per transaction cost incurred on one customer in the physical branch is Rs 50 on an average, while e-banking costs about Rs 10 for a similar transaction.
Recently, ICICI Bank launched 25 electronic branches across 18 cities. The electronic branch, located within the brick and mortar branch, is a one-stop shop for all banking transactions. Among others, it has an interactive kiosk through which services can be accessed by swiping a debit card and provides video-conferencing with the bank’s customer care personnel.
One of the first banks to start the e-lobby facility is Mumbai-based Greater Bombay Cooperative Bank. It is offering all banking transactions to its customers through fully automated lobby banking.
Greater Bank has deployed a single machine called ‘MegaBanker’ in its lobby for 24x7 banking. Customers can use this machine, among others, to deposit cheque/cash (with real time credit to the account), withdraw cash, printing of savings and current account statements, and fake note detection. Currently, Greater Bank has lobby banking in 17 of its existing 21 branches.
Public sector lender Union Bank of India has launched ‘UnionXperience’ branches, where customers can use alternative banking channels any time of the day, irrespective of whether the branch is open or closed. It has implemented these services in 160 branches across 10 cities, with automation through self-service machines. “Today, more than 50 per cent of our transactions get done via e-banking. This saves time and costs for the bank,” said Lalit Sinha, General Manager, Alternate Delivery Channel, Union Bank of India.
A senior ICICI Bank official said the bank wants to expand its technology platform beyond ATMs and desktop devices to mobile and tablet devices.
Challenges
Replenishment of cash in the ATM machines and infrastructure are major problems, Sinha said. “Indians are more comfortable with human interface and hence the customer adaptation to alternate channels is slow,” said Narendra Behere, CEO, Greater Bank.

ICICI Bank launches 25 e-branches

Mumbai, August 23: Private sector lender ICICI Bank announced the launch of 25 electronic branches and other technology-based banking solutions here on Thursday. The 24x7 electronic branching facilities will offer cash and cheque deposit machines with instant credit, interactive kiosks with phone and internet banking services and video conferencing among others. The investment and cost-benefit-accruals relating to the initiative were not disclosed.
Other initiatives include ‘tab banking’ that allows opening an account on a tablet without visiting the bank branch and e-locker facility that helps customers to electronically save scanned copies of their important documents and other value-added services at the ATMs. Charges on the e-locker services will be decided on the basis of the usage of the customers.
At present, the 25 branches have been rolled out across 18 locations including metros and Tier II cities. “About a third of our customers are using Internet banking services....These services will be complimentary to our physical branches,” said MD and CEO, Chanda Kochhar, ICICI Bank. “Today, handheld devices like mobile phones and tablet segment is growing at over 100 per cent every year as compared to the 20 per cent growth in desktops. We want to expand our technology beyond ATMs and desktop devices,” Kochhar said.

Proposed guidelines of RBI on Banks' exposure State Bank of India, ICICI Bank to be affected

New Delhi, August 20: The SBI and ICICI Bank are among those that would be affected if RBI implements its proposed guidelines on banks' exposure to their group entities, global credit rating agency Moody's said today. Last week, the Reserve Bank released draft guidelines to limit banks' exposure to their own group non-financial and financial entities.
As per Moody's, the proposed rules would hurt companies that depend on parent banks for capital and brand support, particularly those with large international operations, or those that operate insurance, securities or asset management businesses that need capital and liquidity support to meet their business needs.
"If the RBI adopts them, the new guidelines would be credit positive for India's banks, but credit negative for group companies that rely on parent banks for capital and brand support," Moody's Investors Service said in a report. It said the "affected banks" include ICICI Bank, State Bank of India, Bank of India, Bank of Baroda and Kotak Mahindra Bank.  "The guidelines would lead these banks to re-examine the financial support they provide to group businesses as anything exceeding the stipulated limits would be detrimental to their standalone capital calculations and thus their business growth," Moody's said.
The rules, it said, would benefit India's banks because they would reduce their concentration and contagion risks from group activities. The guidelines, if implemented, would limit to 5 per cent of paid-up capital and reserves a bank's exposure to a single group non-financial entity, while the maximum exposure to regulated financial services companies would be 10 per cent. However, Moody's said that for the time being, these draft guidelines do not help the banks in any way cope with their immediate asset quality challenges owing to the difficult environment.

Banks should compensate customers for local cheque clearance delay: RBI

Mumbai: The Reserve Bank of India, or RBI, has directed banks to compensate customers for any delay in clearing local cheques. This would mean that banks will have to compensate customers monetarily if a cheque to be credited in an account on Monday, for instance, gets delayed till Wednesday.
In a note to the chiefs of all banks - both commercial and co-operative - the RBI said they should have a cheque collection policy containing details of the amount they would pay customers for any delay in collection and clearance of cheques. If this policy does not include the amount payable for delays, the bank will have to pay the savings account rate to customers as compensation, the central bank said.
"Banks are advised to reframe their cheque collection policies (CCPs) to include compensation payable for the delayed period in the case of collection of local cheques as well. In case, no rate is specified in the CCP for delay in realisation of local cheques, compensation at savings bank interest rate shall be paid for the corresponding period of delay," a statement issued by the RBI on Monday said.
Private banks such as Yes Bank, IndudsInd Bank and Kotak Mahindra Bank offer savings rate in the range of 5.5% to 7%, while state-run banks and some private banks like HDFC Bank, ICICI Bank and Axis Bank, pay 4% on similar accounts. The RBI had, in May last year, raised the savings rate from 3.5% to 4%. Many banks started offering higher rates after the central bank deregulated savings rate last October.
The RBI's decision to link compensation to savings bank account rates comes after it received several complaints from customers about delays in cheque clearance. "Instances of delayed credit to customers' accounts without any compensation for the delayed period beyond the timeline indicated in the CCPs, in respect of local cheques, have been brought to our notice," the RBI release said.

Should you switch your home loan to SBI?

Though State Bank of India (SBI) has cut rates on home loans by 25 to 85 basis points (bps) across tenures (bank’s present discount to its card rates is about 25 bps), it’s a bit early for home loan borrowers to switch their lender. Wait for 10-15 days, as other lenders are likely to follow suit. Borrowers can also use SBI’s example to bargain with their respective lender for better rates. It is most likely that their lenders would agree, as it is in their interest to retain a borrower with a good repaying record, say experts.

For home loans up to Rs 30 lakh, SBI has reduced the interest rate from 10.75 per cent to 10.25 per cent and to 10.4 per cent for loans above Rs 30 lakh. Earlier, for loans between Rs 30 lakh and Rs 75 lakh the interest rate was 11 per cent and for loans above Rs 75 lakh, it was 11.25 per cent. The revised equated monthly instalment (EMI) per Rs 100,000 at the rate of 10.25 per cent for a loan tenure of 30 years would be Rs 897, against the prevailing EMI of Rs 934, said an SBI statement. The waiver of the prepayment penalty for floating rate home loans has made switching lenders to take advantage of lower rates an attractive proposition for borrowers. But that should not be the only criteria for switching your lender. The difference between old and new rates should be at least 75-100 bps for the switch to make commercial sense, as the procedure is cumbersome.

Harsh Roongta, CEO, Apnapaisa.com, says other lenders might also cut rates and it is best to wait for 10-15 days. The biggest advantage is that there is no prepayment penalty on floating rate loans. However, there will be a nominal processing fee and a small fee on creation of security. Home Loan Rates

 SBI #  10.25
Other Bank # Minimum 10.5% floating

* ICICI Bank and HDFC Ltd also have floating interest rate scheme where the interest rates are fixed for the initial few years and thereafter the then prevailing floating rates are applicable.

# SBI rates are effective from August 7, 2012.
 The home loan rates are indicative rates, which may change according to the credit profile of the customer. Source: Apnapaisa Research Bureau

Even if borrowers are getting the new loan at 50 bps less and if only two years are left for repayment, switching to a new lender will help, as the rates offered by SBI are very competitive, Roongta says.

Assume, for instance, a borrower took a floating rate loan of Rs 80 lakh, at an interest rate of 12 per cent and tenure of 30 years. The loan has been repaid for five years. The old EMI is Rs 82,289 and the amount due is Rs 78,13,057. If the loan is reset at 10.5 per cent, the new EMI is Rs 76,000. The difference works out to Rs 6,000. Car Loan Rates

State Bank of India # 10.75
Other Bank # 11.25

Car Loan – Interest rates as on August 02, 2012
* SBI rates effective from August 07, 2012 Source: Apnapaisa Research Bureau

Vipul Patel of Home Loan Advisors, an independent mortgage advisory firm, is advising his customers to use SBI’s rates to bargain for a better deal with their respective lender. If the lender does not agree to lower the rates, then the borrower must switch to a new one. “Even if your bank does not bring down rates to 10.25 (SBI’s charge), they might at least reduce it to 10.5 or 10.75 per cent. If your current rates are 11 per cent or above, even this much of a reduction will help,” he says.

While switching the loan, borrowers should try to keep the monthly repayment constant or increase it, so that the period of the loan does not increase. However, unlike home loans, it does not make sense to switch your car loan. The prepayment charges are huge and the loan tenure is short in most cases (three to seven years).

HDFC Bank overtakes SBI as India's most valued bank

Private sector lender HDFC Bank today surpassed SBI as the country's most valued bank with a total market valuation of about 1,37,500 crore.
SBI shares were seen trading under pressure with a fall of nearly 2% this afternoon, despite an overall uptrend in the market, while HDFC Bank shares gained by more than 3%.
The market benchmark Sensex was trading more than 200 points higher on broad-based buying among blue chips.
As a result, HDFC Bank's market capitalisation rose to Rs 1,37,500 crore, as against SBI's 1,32,700 crore, as per the BSE data.
At close yesterday, SBI was the country's most valued bank with a total market cap of Rs 135,360 crore, followed by HDFC Bank (Rs 133,375 crore), ICICI Bank (Rs 1,04,558 crore), Axis Bank (Rs 41,657 crore) and Kotak Mahindra Bank (Rs 40,178 crore).
At 1415 hrs today, HDFC Bank shares were trading 3.1% higher at Rs 584 after scaling an intra-day high of Rs 588.
On the other hand, SBI was down nearly 2% at Rs 1,977.40 at the BSE, while ICICI Bank was up 2.5%, Axis Bank was up 2.1% and Kotak Mahindra was trading 1.6% down.
In terms of market cap, HDFC Bank and SBI were followed by ICICI Bank (Rs 1,07,221 crore), Axis Bank (Rs 42,541 crore) and Kotak Mahindra Bank (Rs 39,547 crore) at 1420 hours.

Foreign investors lap up SBI dollar bonds

Mumbai, July 26: The country’s largest lender, State Bank of India (SBI), has raised $1.25 billion from investors abroad at 4.125 per cent, for five years. This was the second largest single tranche bond sale that garnered overwhelming response, despite recent concerns expressed by international credit rating agencies on the country’s economy.

SBI’s dollar-denominated bonds were subscribed 5.4 times. They got $6.8 billion from around 350 accounts spread over Asian, European and US investors. The lead managers to the issue were Deutsche Bank, Citibank, Barclays, Bank of America Merrill Lynch, JP Morgan and UBS.

In 2010, SBI had raised $1 billion for five years at 4.5 per cent.

“This issuance has certainly provided a window of opportunity to other high-quality Indian issuers to tap the international bond markets,” said Rajiv Nayar, head of capital markets origination at Citi India. He said the SBI notes were priced at the lowest ever coupon...

SBI's $1 billion international bond issue opens

Mumbai, July 25: State Bank of India on Wednesday launched an international five-year bond sale programme to raise at least USD one billion. When contacted, SBI Managing Director and Group Executive for International Banking Hemant Contractor said that the bank on Wednesday launched its benchmark bond sale through book-building route.
"The issue is open and the details like pricing and the quantum of funds being mobilised will be known only by late night," Contractor said. A benchmark bond issue typically aims to raise more than USD 500 million. According to sources, the bond issue is of over USD 1 billion size with a five-year tenure.
The issue's investment bankers include Bank of America Merrill Lynch, Barclays Capital, Citigroup, Deutsche Bank, JP Morgan and UBS. SBI launched a marketing campaign for its benchmark bond issue on July 16 in Hong Kong, Singapore, London, New York, Los Angeles, Boston, Frankfurt and Zurich.
The bank has a board mandate to raise USD 10 billion from overseas markets over the next few years, and it has a headroom to raise nearly USD 7 billion more since it has raised USD 4 billion. The senior notes offering, which has been rated as 'BBB-' by Standard & Poor's, is a dollar-denominated issue. Giving the 'BBB-' rating on the SBI bond sale, S&P had earlier said this reflects the long-term counterparty credit rating on the bank. "The proposed notes will constitute direct, unconditional, unsecured, and un-subordinated obligations of SBI," S&P said.
SBI's move to raise overseas funds comes in the wake of the recent RBI steps to stem the falling rupee value and measures to encourage foreign debt inflows. Earlier, ICICI Bank and India Overseas Bank had initiated their respective dollar bond plans and had also hired investment bankers, but the offerings were delayed amid tough market conditions.
While Indian Overseas Bank was aiming to raise about USD 500 million, ICICI Bank was eyeing USD one billion through a bond sale. A slew of sovereign downgrades in the past few months have made it difficult for domestic companies to raise overseas debt. So far this year, a sum of USD 4 billion has been raised by two corporates -- USD 3.5 billion by Reliance Industries in two instalments in February and May, and USD 500 million by Axis Bank.
The fourth issue which is underway now, is again from RIL, to raise another USD 1.5 billion, for which market making meetings are beginning tomorrow in Singapore. However, domestic companies had raised over USD 8 billion through dollar bonds in 2011.