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.

SBI to cut processing and conversion fees on home loans

With the advent of festival season India’s largest lender – SBI has embarked upon a special campaign to ramp up its home loan book. It is going to reduce the processing fee for home loans to Rs.1,000 per loan irrespective of the size. The offer would be made available from September 1 onwards, a senior bank official told.
With the advent of festival season India's largest lender - the State Bank of India (SBI) has embarked upon a special campaign to ramp up its home loan book. It is going to reduce the processing fee for home loans to Rs.1000 per loan irrespective of the size. The offer would be made available from September 01 onwards, a senior bank official told.
Currently, loan processing is at 0.25% of the loan amount subject to a cap of Rs 6,500 for loans upto Rs.75 lakhs. For any higher loan amount, the maximum fee ceiling is Rs.10,000.  For example, if you apply for a loan of Rs. 20 lakhs, you need to pay a processing charge of Rs.1000/- With the new offer, it will be uniform at Rs.1,000 for a home loan. However, the offer would end on 30th November, 2012.
At the same time, the banking behemoth is actively mulling reduction in conversion fee which is presently at 1%. For all banks, conversion fees are in the range of 0.50-2%. This move, if implemented, will help the existing (SBI) home loan customers, who are not entitled to get the benefit of reduced interest rates to avail of the lowered interest rates. Let’s assume the loan size is Rs.30 lakhs and a customer has already repaid Rs.10 lakhs. Therefore, he has to pay Rs.20,000/-(i.e. 1% of 30-10 lakhs) one-time upfront for the conversion.
Earlier, SBI cut the interest rates on home and auto loans by over 50 basis points, effective from August 07. However, it did not change the base rate (remains at 10% p.a), the benchmark rate below which the Reserve Bank of India does not allow any bank to lend. Now, a home loan borrower can avail of a home loan with interest at 10.25% as against 10.75% prior to the rate cut, for a ticket size of Rs 30 lakhs. The interest rate will be 10.40% for loans above Rs. 30 lakhs. The EMI on Home Loan tenor of 30 years is Rs.897 per lakh which is the lowest in the market.
However, the new rates are available only to the new customers. So, a customer who had taken a loan at a higher floating rate viz. 11.25% will be keen to avail the benefit of the current lower rate. So, he can convert his loan to the new rate by paying the conversion fee. "Those proposed moves by RBI will certainly benefit customers, who should tap opportunities right in time. However, the bank cannot just keep on doing this beyond a point as it may hurt their margins," said Anil Rego, CEO and founder, Rights Horizons, a Bangalore based advisory firm.
With 26% market share, SBI continues to be the leader in home loan market followed by the privately held housing finance company- HDFC.  "We have got some surplus funds after RBI cut statutory liquidity ratio by 1% to 23%. We have decided to utilize it in expanding our retail business. The Bank is aiming at 20-25% growth in its home loan portfolio. As the country's largest bank, we have a vital role to play in supporting the economy", said the official.
As of July, SBI's home loan portfolio stood at around Rs 1.06 lakh plus crores. Total retail loans stood at Rs 1.86 lakh crores in the April-June quarter. To facilitate home loan borrowers, it is planning to upload the list of housing projects, approved by the bank shortly.  The bank has tied up with 1,046 such projects across India till July in 2012-13. In order to enlist its projects, a builder has to meet certain norms prescribed by SBI. For listed projects, the bank sanctions home loans in 4-5 days while it takes around 14 days to approve a home loan for other housing constructions. The lender offers a loan to value (LTV) of 90% for home loans upto Rs 20 lakhs and upto 80% for loans above Rs 20 lakhs.

Banks offer festive bonanza to customers

Mumbai, August 18: With an eye on getting business in the festive season, banks have started offering discounts on interest rates and waiving processing fees to attract retail customers. Mumbai-based Union Bank of India on Saturday announced it has waived processing fees on home and auto loans from August 15 to January 26.

State Bank of Bikaner and Jaipur, an associate of the State Bank of India, has found an innovative way to attract customers. While the bank is giving a discount of 25 basis points on retail loans across the board, customers who are applying for a car loan above Rs 10 lakh on line will get an additional rebate of 25 basis points, thus making the effective interest rate at 10.5 per cent which is the base rate of the bank, said Shiva Kumar, managing director, SBBJ. He added, the bank was offering 10.75 per cent for home loan customers, and those who apply on line will get a rebate of 10 basis points.

With credit growth slowing down in the current financial year amid high interest rate, banks are seeing the festive season as an opportunity to boost their credit portfolio. State Bank of India, for example, had said that it expected growth in retail credit to offset the impact of slowdown in corporate credit. The country's largest lender had earlier announced the cut in the interest rates for home and auto loans, immediately after Reserve Bank of India announced a one per cent SLR cut in July. SBI's home loan rates stand at 10.25 per cent for home loans up to Rs 30 lakh and 10.4 per cent for the loans above Rs 30 lakh. It also slashed its interest rate on car loans by 50 basis points to 10.75 per cent across the tenors.

Another public sector lender Andhra Bank is expected to take the decision about cutting interest rates on retail products. “We will be taking a decision soon” said, K K Misra, executive director of Andhra Bank.

Central Bank of India has already launched some products and is in the process of launching few more schemes both on asset and liability side. It has launched a special 555 days fixed deposit product in which the interest rate is higher by 50 basis points that the normal deposits of that tenor. It has also launched a recurring deposit account where the customer has the flexibility of putting the money according to his/her adjustment. Normally in the recurring accounts one has to put a fixed sum every month. “We will be waiving the processing fees on the retail loans, and where there is scope of reduction of interest rates we will cut the rates” said Ram Sangapure, general manager (retail), Central Bank of India.

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.

Banks begin reviving special schemes

Special schemes are back in focus as bank deposits continue to grow only at a sluggish pace. With no relief in sight for further monetary policy easing, banks have also increased interest rates on long-term deposits, to garner much needed liquidity.
State-run Bank of Baroda on Monday revised deposit rates upwards by 25-65 basis points (bps). M D Mallya, chairman and MD, said it had realigned the rates, keeping in view the sticky inflation and entrenchment of inflationary expectations. The bank has introduced a term deposit scheme of 1,111 days, offering an interest rate of 9.15 per cent. This is 15 bps higher than the normal term deposit of similar tenors.
Other public sector lenders and small private banks are also offering such schemes, where depositors would have to lock-in funds for an exact number of days. "The only attraction in such schemes is a higher rate of interest as compared to normal deposits of the same tenor bracket," said a general manager of a large public sector bank (PSB).

Central Bank of India raised rates on special deposit schemes by 20-25 bps, effective August 6. UCO Bank extended its schemes till September and also increased the maximum deposit cap to Rs 5 crore. In the past fortnight, PSBs have also realigned the rates offered on deposits up to Rs 15 lakh, on Rs lakh to Rs 1 crore and for Rs 1 crore and above.
In October 2007, the Reserve Bank of India (RBI) had asked banks to withdraw special schemes, as the rates of interest offered on these deposits were not in tune with those on normal deposits.
"No bank should discriminate in the matter of interest paid on deposits, between one deposit and another, accepted on the same date and for the same maturity, whether such deposits are accepted at the same office or at different offices of the bank," it had told banks.
To stay within regulatory limits, some banks exclude the special scheme tenor from the normal deposit bucket. For instance, a bank might offer 50 bps more on a tenor of 1,000 days, as compared to tenors of up to 999 days.
Akeel Master, partner, KPMG, said the trend might not sustain for long, as higher interest rates will have an impact on banks' margins in the absence of a corresponding growth in advances. "Banks that are under pressure from mismatch in asset-liabilities for certain tenors must have been compelled to tweak interest rates accordingly," he said.
RBI’s latest data shows bank advances, as of July 27, had grown 17.2 per cent over a year, while deposit growth lagged at 13.8 per cent .
The central bank has projected deposit growth of 16 per cent in the annual monetary and credit policy for 2012-13.
"Concerns that deposit growth has significantly been slower than credit growth for a prolonged period of time is something we have been watching closely and that was one of the issues we discussed with bankers on Monday," RBI Deputy Governor Subir Gokarn had told Business Standard in an interview after the first quarter policy announcement last month.
He said RBI might put out a projection in the second-quarter policy review to be announced on October 30. It is slated to announce the mid-quarter policy review on September 17.

State Bank of India: Net Profit Increased to Rs 3,752 crore

Mumbai, August 10: State Bank of India reported a 137 per cent jump in net profit in the April-June quarter despite continued challenge on the bad loans front. In the reporting quarter, India’s biggest bank clocked a net profit of Rs 3,752 crore compared with Rs 1583 crore in the year ago period.

Tight leash on operating expenses (up by 7.5 per cent at Rs 6,441 crore) and write-back in investment depreciation (Rs 521 crore, due to favourable interest rate movement) boosted the bank’s profitability. According to Pratip Chaudhuri, Chairman, SBI, “Our earnings have stabilised and this has become a new normal for SBI. This is in spite of the fact that provisioning has been a little higher than normally what we do. But we did not have to skimp on the provisioning.”

He pointed out that the challenge for the bank is on the bad loans front. During the reporting quarter, the gross and net non-performing loans increased by about Rs 7,500 crore and Rs 4500 crore, respectively. “In terms of NPA by sector, we have been able to contain the increase in NPAs in the large corporate book. But what has proved to be our nemesis is the increase in NPAs in the mid-corporates, particularly in the SME segment,” the SBI chief said.

Though the net interest margin (the ratio of net interest income to earning assets) was a tad lower at 3.57 per cent (3.62 per cent in the year-ago period), the bank has maintained its guidance of 3.75 per cent for FY13. Due to stress in the mid-corporate and small and medium enterprise segments, SBI will focus on segments such as home and car loans and large corporate loans to boost credit growth.

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.

NSTFDC and SBI Sign Refinance Agreement

New Delhi, August 2: The National Scheduled Tribe Finance and Development Corporation (NSTFDC) and State Bank of India (SBI) signed a Refinance Agreement here today in the presence of Shri V Kishore Chandra Deo, Union Minister of Panchayati Raj and Tribal Affairs. The agreement was signed by the Shri Gur Saroop Sood, Chairman-cum-Managing Director of NSTFDC and Shri A Krishna Kumar, Managing Director and Group Executive (NB) of SBI. On the occasion, Shri Kishore Chandra Deo said that this is a significant occasion when State Bank of India, the largest Public Sector Bank in the country, has entered into an arrangement with NSTFDC for channelizing concessional loans to the Scheduled Tribes. This also reflects positively on the SBI that they not only cater to the large business houses and high net worth individuals and industrialists but are also committed to economic upliftment of the weaker sections of the society.

The Minister said that today’s arrangements would open a new era towards micro financing of needy Scheduled Tribes by NSTFDC through SBI. Under the arrangements, NSTFD would provide refinance to SBI for loans extended to Self Help Group comprising all ST members. ST beneficiaries would pay concessional interest rate of 6% p.a. only. This arrangement would open doors of more than 14000 branches of SBI to the needy Scheduled Tribes Community for seeking loans upto RS. 5 lakh at the concessional rate.

He informed that the NSTFDC is an apex organization or economic development of Scheduled Tribes, was set up in April 2001 under the Ministry of Tribal Affairs. This Corporation provides financial assistance to Scheduled Tribes at concessional rates of interest for taking up income generation activities. The Corporation in its 11 years of operations has sanctioned financial assistance for schemes costing around Rs. 2200 crore. of this NSTFDC share is around Rs. 1200 crore, while the balance has been met by way of margin money/subsidy/promoters contribution. This financial assistance has benefited around Rs. 5 lakh STs throughout the country.

Shri Deo said that most of the STs are geographically isolated and under-privileged on most of the development indices. This calls for specific need based intervention from developmental agencies and not a ‘one size fit all’ approach. He said that within the framework of schemes of NSTFDC, a tribal can take up any vocation suited to his/her aptitude, skill set, habitat etc. There is a complete flexibility in this regard. He can opt to obtain assistance for agricultural or services or transport or even industrial sector activity. NSTFDC’s recently launched Education Loan Scheme is also calibrated to empower ST students for obtaining professional/technical education and for pursuing Ph.D in India. The NSTFDC is not only implementing its schemes through State Channelizing Agencies but is also increasingly exploring the avenues of reaching out through Public Sector Banks and Regional Rural Banks who have entered into agreements with NSTFDC.

On the occasion, Shri Mahadeo Singh Khandela, Minister of State for Tribal Affairs and Smt. Vibha Puri Das, Secretary of the Ministry were also present.

Rate cut could be good news this festive season

New Delhi, August 6: RBI's decision to slash the SLR rate by 100 basis points has pleasantly surprised many. Banks had witnessed tight liquidity position in last few months, but the current move by RBI would ease the pressure, to some extent. The effect of RBI's step has been taken immediately by the State Bank of India (SBI) on a positive note as it has announced a cut in the home loan and car loan interest rates with effect from August 7, 2012. Home loan interest has been cut to 10.25 per cent from existing 10.5 per cent for the loan amounts below R 30 lakh, whereas the loan amount between R 30 lakh to R 75 lakh will now attract an interest rate at the rate of 10.4 per cent.

 

The maximum cut of 85 basis points has been announced on the loan amount above R 75 lakh. Auto loan interest rate has been reduced to 10.75 per cent from the previous rate of 11.25 per cent. The banking sector is expected to follow the trend with increased liquidity in the days to come. The base rate is standing unchanged at 10 percent at the moment, so existing bank borrowers would not get the benefit of any rate reduction.

 

In the term-deposit front, SBI has announced a cut in the term deposit rate for five years (up to ten years) by 25 basis points to 8.5 per cent with effect from August 7, 2012. Contrary to the move of the largest bank, the second-largest bank of India i.e. Punjab National Bank (PNB) has announced an increase in term deposit rate from 8.75 percent to 9 percent for a one-year tenure single deposit of Rs one crore or fewer amounts. It has also increased the NRE deposit rate to 9 percent. The PNB's change would be effective from August 2.

 

Good news this festive season

 

The current reduction in the loan rates is expected to change the momentum of loan trends in the banking sector. With the reduction in housing loan interest rates, banks that reduce the interest rate in current market would position itself as an affordable loan provider amongst other banks.

 

Similarly, in the car loan segment, banks would compete to attract customers with offers and discounts in interest rates.

 

With the festive season round the corner, most banks are likely to slash interest rates. Also there is bound to be increased consumer interest in the purchase of home, cars and consumer durables during the festive season, increasing the probability of a downward loan trend. Expenditure tends to rise this season and banks would ideally like to be in a position to offer the interested borrower the best deal. From the point of view of customers, any further rate cut by banks would be a welcome move, and they will find the prospect of a lowered interest rate burden on car and housing loan very attractive now.

 

The rate cut could well be one of the strategies for banks to take up market share in the retail loan segment. Since RBI has restricted banks from charging penalty on prepayment of loans or levying foreclosure charges on floating-rate home loans, banks that slash the rate would benefit in context of clients shifting from other banks, which are still waiting to reduce the rate. If other banks don't follow the trend by cutting the rate, then they are likely to lose a few customers in the days to come.

 

Being the festive season, the banks are not only expected to cut the interest rates but also offer discounts in other charges to attract the customer and find a space between car and home buyers. It looks like SBI has just pushed the alarm button for other banks to wake up to a changing trend. So the current scenario looks all set for more smiles on the faces of customers in the days to come.

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).

Trying to increase coverage in retail space: Pratip Chaudhuri

Mumbai, August 2: In an interview with ET Now, Pratip Chaudhuri, Chairman of State Bank of India, gives his views on the RBI monetary policy and rate cuts. Excerpts:

 

ET Now: Firstly, how much of a benefit will SBI get from the cut in SLR announced by the RBI in this policy?

 

Pratip Chaudhuri: We thank the RBI. The policy had become two-dimensional. People used to only talk about the repo rate and a possible CRR cut. But the RBI added a third dimension of injecting liquidity beyond these two instruments, i.e. repo rate and CRR cut. Last time they increased the refinance component on export credit from 15% to 50%. This has given us an additional Rs 5000 crore.

 

The SLR cut has released about Rs 10000 crore for SBI. So what it means to my mind is that Rs 10000 crore which was locked up in low-yield SLR security, we would have greater urgency to deploy that in productive sectors.

 

ET Now: How much is your present SLR holding and would you look at taking benefit of the SLR reduction limit which was announced by the Reserve Bank of India on Tuesday?

 

Pratip Chaudhuri: Our SLR holding is currently about 28%. With this 1% reduction, it would become about 4% surplus. So you can either sell, depending on where that particular scrip is trading. Even if you don't sell, you can always put it into LAF and get liquidity. So roughly we have Rs 40000 crore of extra liquidity.

 

ET Now: Is the cut in your base rates as well in the pipeline then?

 

Pratip Chaudhuri: Not a broad-base rate cut. Only car loan and home loans are being targeted because we think that the instrument of interest rate should be used for increasing the credit flow.

 

So we think that the impact of cutting interest rates would be highest in these 2 segments -- home and car loans. No matter what is the interest rate for the corporate sector, there is hardly any demand for term loans. Working capital loans are also not in high demand because currently the commercial papers are going at about 9.3 to 9.7, which is below the base rates of all banks. So we are trying to increase our coverage in the retail space.

SBI cuts interest rates on Home & Car loans from August 7

Mumbai, August 1: The country's largest lender State Bank of India will cut rates on its home and auto loans. The move comes close on the heels of the Reserve Bank of India cutting the statutory liquidity ratio for banks in its policy statement on Tuesday.

 

SBI will cut rates on home loans by 25 bps and on auto loans by 50 bps, the bank's chairman Pratip Chaudhuri told ET NOW in an exclusive interview. The new rates will be effective from August 7. The bank, however, is not in a position to cut its base rate at present.

 

"We need to use interest rates as an instrument to increase credit flow. We are targeting home and auto loans because the pass through in both these segments will be the fastest," Mr Chaudhuri said. SBI's asset liability committee met on Wednesday evening to take a call on interest rates following the RBI's policy.

 

According to Mr Chaudhuri, "there is very weak corporate demand and it won't make business sense to cut rates for corporates at this juncture." However, he added that a pick-up in demand from corporates may lead to the bank looking at reducing rates for corporates.

 

SBI has in the recent past cut rates on its SME and auto loan portfolios but this is the first home loan rate cut by the bank in a few quarters.

 

Though the bank hasn't taken any call on deposit rates yet, Mr Chaudhuri mentioned that SBI is seeing a surfeit of deposits at a time when the rest of the banking industry is starved of deposits. The bank will declare its Q1 earnings on August 10.

 

PTI Reports:  New Delhi, August 1: State Bank of India today slashed lending rates on car and home loans by up to 0.5 per cent, a day after one per cent cut in SLR by the Reserve Bank. SBI has reduced interest rate on home loans of up to Rs 30 lakh to 10.25 per cent from existing 10.50 per cent (after 0.25 per cent concession over the card rate), a senior bank official said.

 

On the home loans of beyond Rs 30 lakh but less than Rs 75 lakh, the new rate will be 10.40 per cent against the existing 10.75 per cent, down 0.35 per cent.

 

The new rates will be effective from August 7, the official added. The base rate or minimum lending rate of SBI stands at 10 per cent. Base rate is the benchmark rate below which a bank cannot lend.

 

With regard to the car loan, the reduction is to the extent of 0.5 per cent. The new car loan would be 10.75 per cent against the existing rate of 11.25 per cent for a seven-year loan. Now for every Rs 1 lakh, a customer has to pay Rs 1,699 EMI against Rs 1,725 per month earlier. SBI claimed this as the lowest EMI. With the reduction, a borrower would end up saving Rs 312 per year on every one lakh.

 

Yesterday, RBI in its quarterly monetary policy review reduced Statutory Liquidity Ratio (SLR), the amount of deposits that have to be invested in government bonds and other liquid assets, by 1 per cent. RBI Governor D Subbarao cut the SLR to 23 per cent, thereby releasing around Rs 68,000 crore of additional liquidity into the system, even as he left all the key interest rates unchanged in the anti-inflationary stance.

SBI cuts home, car loan rates

Thursday, August 02, 2012

State Bank of India has cut home loan and car loan rates. This could trigger a rate war among banks to attract retail customers as loans to industry have slackened.

SBI’s rate cut gambit comes in the wake of the RBI effecting a one percentage point cut in the statutory liquidity ratio on Tuesday. The SLR cut is seen allowing banks the cushion of additional liquidity.

India’s largest bank has cut home loans by up to 0.60 percentage points and car loans by 0.50 percentage points.

The interest rate on home loans up to Rs 30 lakh will be 10.25 per cent (10.50 per cent earlier).

On home loans beyond Rs 30 lakh and up to Rs 75 lakh, the bank will charge 10.40 per cent interest (10.75 per cent). The interest rate on home loans beyond Rs 75 lakh will be 10.40 per cent (11 per cent earlier).

SBI has cut interest rates on car loans to 10.75 per cent from 11.25 per cent earlier. The equated monthly instalment on car...

SCHEME OF 1% INTEREST SUBVENTION ON HOUSING LOANS

The Union Finance Minister during the Budget for 2009-10, had announced a Scheme of 1 per cent Interest Subvention in respect of individual housing loans upto Rs.10 lakh, provided the cost of unit does not exceed Rs.20 lakh. The validity period for the scheme is 1^st Oct 2009 to 31^st March 2011.

From 01.04.2011 onwards the scheme was modified with eligibility extended to individual housing loans upto Rs.15 lakh, provided the cost of unit does not exceed Rs.25 lakh. The present validity period for the scheme is 1^st April 2011 to 31^stMarch 2013.

SBI Chief Pratip Chaudhuri says repo rate cut won’t be sufficient

Mumbai, July 27:  A cut in the cash reserve ratio (CRR) could serve as a mood elevator for the markets, according to the State Bank of India Chairman, Mr Pratip Chaudhuri. CRR, currently at 4.75 per cent, is the slice of deposits that banks have to maintain with the Reserve Bank of India (RBI). “Perhaps there should be a 50 basis points CRR cut (to 4.25 per cent). I don’t know what kind of liquidity signals are being looked at.
“I do not agree with this that the total borrowing under the LAF (liquidity adjustment facility) is a ‘measure of the street’. The ‘measure of the street’ is at what price banks are issuing certificates of deposits (CDs),” said Mr Chaudhuri at a press meet to announce the conclusion of the bank’s $1.25-billion five-year overseas bond offering. LAF is a facility extended by the RBI to banks to avail themselves of liquidity in case they face deficit or park funds with the RBI in case they have surplus funds on an overnight basis against the collateral of government securities.
Mr Chaudhuri said that if banks are continuing to issue CDs at 9 per cent and 9.2 per cent, it obviously indicates that the liquidity situation is not comfortable.

‘Strong case for rate cut’
“Last time they (the RBI) skipped CRR cut. So, there is a strong case for it now. Globally, the monetary authorities have taken upon themselves the task of rejuvenating the economy. One thing that they can contribute is by moderating the interest rates,” reasoned the SBI chief.
The interest rate differential between Indian and overseas markets opens up carry trade. “Rupee is a good currency for deposits but not-so-good currency for bonds. We think there is case for bringing down the CRR and that will have a cooling effect on interest rates, especially for customers,” said Mr Chaudhuri.
In case of a repo rate cut, the benefits (for banks) are little. If there is no benefit, then banks cannot pass on any interest rate cut, he explained.

Disadvantage India
“Interest rate acts as a signal. It is a necessary but not a sufficient condition (for growth). It is a mood elevator. If interest rate comes down, it will trigger enthusiasm (among various participants in the economy). To some extent, most markets are a function of sentiments. Market sentiment will turn positive if there is a reduction in interest rates,” said Mr Chaudhuri.
Pointing out that Indian companies were at a disadvantage vis-à-vis their foreign competitors, the SBI chief said if the promoter of a power plant buys capital equipment from an Indian manufacturer, then he has to take rupee loan, which will come at 10-11 per cent. If the promoter were to go for foreign gear, say, Chinese equipment, which is very common, the interest cost is 4 per cent.

Low-cost Deposits up
According to Mr Chaudhuri, SBI’s retail deposit growth has been quiet good in the first four months of the current financial year. Low-cost deposits in current accounts and savings bank accounts increased by about Rs 30,000 crore in those first four months. However, loan growth has been muted.

NRI Car Loan Interest Rate

State Bank of India: Interest Rates on 1^st April, 2012

For the purpose of computing perquisite valuation

Interest rates as on 1^st April, 2012 on various loans in Personal Segment advances are as under

NRI Car Loan
For all tenures		1.25% above Base Rate i.e. 11.25% p.a.

Coming clean on NPAs

A Reserve Bank of India (RBI)-appointed panel has rightly recommended that all bank loans being subject to ‘restructuring’ be classified as non-performing assets (NPA). Currently, such loans are treated as ‘standard’, even when the terms of their restructuring involve banks taking a hit, whether through reduction in interest rates, elongation of repayment period, part waiver of principal or interest, and so on. Whichever way one sees it, restructuring entails borrowers being granted concessions that the banks would not otherwise even consider. Moreover, not treating these loans for what they are — in practical terms, their performance is nothing but ‘sub-standard’ — makes no sense when the amounts involved are not small either. Between March 2009 and March 2011, the gross NPAs of Indian banks rose from around Rs 68,000 crore to Rs 94,000 crore. But restructured advances, technically regarded as ‘standard’, soared even more from just over Rs 60,000 crore...

Download term deposits interest calculator

download link of term deposits interest calculator:
link 1
link 2

State Bank of India (SBI) Fixed Deposits, Time Deposits or Term Deposits Maturity Interest Calculator. The Calculator calculates the Interest or Maturity Amount you will get after maturity of Fixed Deposits or Term Deposits. State Bank of India (SBI) Fixed Deposits, Time Deposits or Term Deposits Maturity Interest Calculator: is an investment planning tool which allows any Fixed Deposit investor to know the effective annual interest, total returns and total interest or Maturity (Future) Value on the Investment to the individual or business enterprise.

Term deposit is a deposit held at a financial institution that has a fixed term.This is an account which allows to deposit money for a fixed time period. The advantages of term deposits compared to usual savings are the higher interest rates as they have a fixed term. Fixed Depositor Term Deposit is a fixed amount of money deposited at a financial institution, for a fixed time period and for a fixed rate of interest throughout the period. The rate of investment on it is decided by the financial institution, and it is usually calculated based on the invested amount and the tenure of the fixed deposit. Once the term is over, a fixed deposit matures and the maturity amount is available for withdrawal.

The general thumb rule about fixed deposits is that the longer the money is invested, the better the returns. Before investing for any fixed or term deposit, the basic calculations to select the the perfect plan is wise. Therefore when it comes to fixed deposits interest calculation, this fixed deposit or term deposits interest calculator assists you to get the calculations done and you get the maturity value as well as interest receivable by yourself. Great Tool or Calculator for calculate term deposits interest & maturity value. This calculator is designed by admin of www.mysbi.tk for the use of people or customer of any Banks or who wants to invest in FD or TD.

Latest Interest Rates for Domestic Term Deposits for Rs. 1 Crore & above

Domestic Term Deposits of 'Rs One Crore & above'

Term Deposits will continue to be accepted for amounts of ‘Rs. one Crore & above’ at all branches and the ’card’ rates w.e.f. 29.07.2011 are as below:

7 days to 14 days 7.50

15 days to 30 days 7.50

31 days to 45 days 7.50

46 days to 90 days 7.50

91 days to 179 days 8.00

180 days to 240 days 8.00

241 days to 270 days 8.00

271 days to less than 1 year 8.25

1 year to less than 2 years 9.00

2 years and above 8.75


The Differential Rates of Interest (DRI rates for higher amount of deposits) for the day may be obtained from the DGM (SME) at the nearest Local Head Office through the nearest branch.

Premature payment of term deposits:

Interest to be charged on premature withdrawal of term deposits at 0.50% below the rate applicable for the period deposit has remained with the Bank or 0.50% below the contracted rate, whichever is lower, for tenors above 90 days. Penalty for premature withdrawal of term deposits has been waived for deposits of tenors upto 90 days. However, no interest shall be paid on term deposits that have remained with the Bank for less than 7 days.

Latest Interest Rates for Domestic Term Deposits

The revised interest rates for Domestic Term Deposits 'Below Rupees One Crore' effective from the 11.07.2011 would be as under:

7 days to 90 days 7.00

15 days to 45 days 7.00

46 days to 90 days 7.00

91 days to 179 days 7.25

180 days to 240 days 6.50

241 days to less than 1 year 7.75

1 year to less than 2 years 9.25

2 years to less than 3 years 9.25

3 years to less than 5 years 9.25

5 years and up to 10 years 9.25

There shall be no premium in rate of interest for single domestic term deposit of ‘Rs.15 lakhs but less than Rs.1 Crore’ of any maturity.

The revised rates of interest shall be made applicable to fresh deposits and renewals of maturing deposits. The interest rates on “Capgains Plus”, “SBI Tax Savings Scheme 2006(SBITSS)” schemes and NRO deposits shall be aligned as per the revised rates for domestic term deposits. These rates of interest shall also be made applicable to domestic term deposits from Cooperative Banks

Premature Payment of Term Deposits:

Interest to be charged on premature withdrawal of term deposits at 0.50% below the rate applicable for the period deposit has remained with the Bank or 0.50% below the contracted rate, whichever is lower, for tenors above 90 days. Penalty for premature withdrawal of term deposits has been waived for deposits of tenors up to 90 days.

"However, no interest shall be paid on term deposits that have remained with the Bank for less than 7 days."