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.

RBI wants banks to cut base rates, not select lending rates

Mumbai, August 6: With banks led by the country’s largest lender State Bank of India (SBI) choosing to cut spreads on certain categories of loans instead of the base rate, deputy governor Anand Sinha today said the Reserve Bank would like the banks to cut the minimum lending rate to better carry forward its monetary policy measures.

“The base rate is supposed to be responsive to the changes in monetary conditions Reserve Bank would definitely want the responses to be through the base rate,” Sinha said at an IDBI Bank event here. Sinha further said an RBI committee on interest rates, headed by him, is looking into these aspects.

The committee, supposed to come out with report last month, has made progress and will be submitting it soon. Replying to a question, Sinha said banks are unable to cut their base rates as per the monetary policy changes, because they carry the burden of fixed rate deposits and fixed costs to service that over a longer-time.

“Banks are not able to respond quickly to the changes in monetary conditions or monetary policy signals because they carry a fixed cost over an extended period of time,” he said, flagging this as a subject of discussion with bankers during deliberations on floating deposit rates.

On asked if the RBI which has been discussing floating rate deposits but also stressing fixed rate loans is concerned over potential asset liability mismatches, Sinha replied in the affirmative. “Asset liability concern, in the long-term, yes,” he said, adding that so far banks have been successful in managing the longer gestation infrastructure projects.

Though, since January, the RBI has cut repo rate by 50 bps and CRR by 125 bps, and a 100 bps SLR cut last week, the effect of the same has not been passed on to the customers by banks by lowering interest rates as a whole. Instead, banks have been cherry-picking interest rates reduction, and have not lowered their base rates, which would automatically lead to a similar reduction in interest rates for both existing as well as the new customers.

Some banks like State Bank and Union Bank of India, among others, have slashed interest rate on certain loan products like home loans and lending to SMEs, but have not cut the base rate, or the minimum rate of lending.

State Bank of India's asset quality improving: Chairman

Mumbai, July 27 (Reuters) - State Bank of India's asset quality is improving compared to last year, Chairman Pratip Chaudhuri said on the sidelines of a news conference after announcing its $1.25 billion bond issue. He did not give any further details citing a silent period ahead of the earnings. India's biggest lender will post April-June quarterly results on Aug. 8, Chaudhuri added.

The comments came after SBI shares slumped as much as 3.8 percent on Friday as a rise in non-performing assets at Punjab National Bank and Union Bank sparked concerns about asset quality in the government-run banking sector.

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...