Govt asks banks to cut cheque transactions

To promote electronic payments, the government has asked banks to reduce cheque-based transactions by at least 20 per cent through identified branches in 2012-13.

The Finance Ministry has directed banks to ensure that e-payment mode gets the attention it deserves, sources said.

"It is considered imperative for banks to take six minimum steps, including identification of top 20 per cent branches in terms of business volume (2011-12)," sources said.

The aim is to bring down the number of cheque-based transactions by at least 20 per cent through identified branches in 2012-13.


The government has been encouraging transactions through e-payment channels to reduce the number of transactions through cheques and other expensive modes.

The Finance Ministry has also asked public sector banks (PSBs) to ensure that all payments and disbursements by the banks, except sundry payments, are made only electronically.

"Banks must devise suitable monitoring parameters to judge the effectiveness of the e-payment drive," sources said, adding that the Executive Director dealing with the matter should be assigned the responsibility of supervising e-payment drive in the respective banks.

+

National Housing Bank slashes its lending rate by 0.5% to 10%

National Housing Bank (NHB) has cut its lending rate by 0.5 per cent a step that will result in reduction of cost for mortgage firms like LICHF and HDFC.

The Prime Lending Rate (PLR) has been decreased from 10.5 per cent to 10 per cent with immediate effect, NHB Chairman and Managing Director R V Verma said.

"The decision has been taken keeping in view market condition and also the need for supporting the industry and individual home buyer," he said.


It will directly benefit all floating rate loans linked to PLR, he said, adding, it should further spur demand for individual housing loan.

NHB directly lend to housing finance companies as well as provide refinance to entities related to the development of housing.

On an average, NHB accounts for 25-30 per cent of the resources raised by housing finance companies and in some cases the share is as high as 60 per cent.

Last fiscal, the NHB disbursed loan to the tune of Rs 14,454 crore registering an increase of 20 per cent over the last fiscal.

The loan book size of the bank increased by about 26 per cent in 2011-12 to Rs 28,490 crore as against Rs 22,543 crore in the previous fiscal.

Following the CRR cut by the Reserve Bank of India, country's largest bank State Bank of India (SBI) reduced the minimum lending rate by 0.25 per cent last week.

With the reduction, the base rate of the bank came down to 9.75 per cent, the lowest in the banking sector.

The decision came a day after the RBI cut Cash Reserve Ratio (CRR) by 0.25 per cent to 4.5 per cent inducting Rs 17,000 crore into the system.

+

State Bank of Patiala hikes deposit rates

 New Delhi: State Bank of Patiala today said it has increased the interest rates for deposits of maturity of one year to 9.25 per cent from 9 per cent earlier.

With this, deposits of one year to 555 days will attract interest rate of 9.25 per cent.

SBP, which is a wholly-owned subsidiary of India’s largest public sector lender SBI, has also revised the deposit rates to 9.75 per cent for maturity of one year for senior citizens.


Thus, deposits maturing in one year to 555 days will earn interest at 9.75 per cent for elderly people.

The scheme came into effect on September 13, it said in a statement.

It will close on September 28, the last working day of this month, as the bank branches across the country will be closed for public transactions on September 29, on account of the half-yearly closing of accounts.

Meanwhile, SBI and some other major private sector lenders such as Axis Bank, ICICI Bank and HDFC Bank had reduced their deposits rates recently.

The annual interest rate will be 9 per cent for term deposits of 556 days to less than five years, and 8.75 per cent for deposits between five years and ten years, it said.

+

SBI to recruit 20,000 people in next four years

State Bank of India (SBI),Country’s largest banking and financial services company in India by revenue, assets and market capitalisation. It is a state-owned corporation with its headquarters in Mumbai, Maharashtra.

The Bank  is set to hire 20,000 staff across both the officer and clerical cadres over the next one year, reports the Hindu Business Line.


Public sector bank SBI had 214000 employees on its rolls as of June 2012. As of June this year SBI had 80,329 officers and 95,018 clerks on its rolls. The Bank is set to expand its staff by ten per cent over the next one year. A major part of the new recruitment that will be made by SBI over the next one year will be for the 1,200 new branches that the bank proposes to open in the current year.

Why so many Recruitments?

As you all are aware that there are large number of retirements in the banking sector  in the next 4-5 years. In SBI only, about 35-40 per cent of the staff or about 70,000-80,000 people will be retiring across all levels. Recruitment of clerks is higher in number because of a large deficit in clerical staff in many SBI’s branches as reported by MD. A recent article in businessline revealed about these vacancies.

+

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

Mumbai: ICICI Bank and HDFC Bank, two of the country's largest private sector banks, today revised interest rates on fixed deposits by up to 0.50 per cent each, a week after State Bank of India reduced term deposits rates.

ICICI Bank has reduced interest rates of retail fixed deposits by 0.5 per cent for tenures ranging from 91 days to less than 5 years, the bank said in a statement.

"ICICI Bank has also rationalised the interest rate on retail fixed deposits of tenure up to 45 days," it said.


Under the revised rates effective September 11, the bank, which earlier had a peak offering of 9.25 per cent, will now offer 8.75 per cent for a deposit under Rs 15 lakh in the 390-day to less-than-two-year  period, according to the information available on its website.

Meanwhile, HDFC Bank has revised interest rate on fixed deposits by up to 0.50 per cent on select maturities.

For deposits of maturity between six months 17 days and nine months 15 days, the upward revision is 0.5 per cent to 7.75 per cent.

Term deposits for nine months 16 days would earn 0.25 per cent lower interest at 7.75 per cent.

The rate on nine months 17 days to 1 year fixed deposit would go up by 0.5 per cent to 7.75 per cent, as per the data posted on the bank's website.

Last week, State Bank of India (SBI) slashed interest rate on fixed deposits up to 1 per cent across various maturities.

SBI Chairman Pratip Chaudhuri had said its deposit rate cut of up to 1 per cent was aimed at protecting the margins as deposits have grown much faster than advances in recent months.

+

SBI cuts deposit rates by 50 bps

 MUMBAI: The country's largest lender, State Bank of India, has brought down interest rates on term deposits by 50 basis points across maturities - a move that indicates that demand for funds is easing. Traditionally, SBI's rates act as the benchmark for banks and a cut by the lender has implications for the whole industry.

Following the cut, the highest return offered by the bank is at 8.5%, offered on all deposits maturing between one and 10 years. On lower term deposits, the bank offers 6.5%. The revision also simplifies the rate structure into two slabs from five sets earlier.


SBI chairman Pratip Chaudhuri said that in the first five months of the current fiscal (April-August 2012), the bank has seen its deposits grow by Rs 78,000 crore. However, loans have grown by Rs 20,000 crore during the period.

With demand of funds easing, SBI has been able to completely offload its bulk deposits. "We wanted to go slow in deposit mobilization; and if we did not reduce deposit rates, it could have put pressure on margins," said Chaudhuri.

The SBI chief said that he expected the Reserve Bank of India to bring down the cash reserve ratio (CRR) requirement for banks in the forthcoming monetary policy, which would release additional funds for banks.

SBI recently announced a series of cuts in rates on home and auto loans and also lending to small and medium enterprises to accelerate the growth of its retail portfolio to compensate for the slowdown in corporate credit. The bank offers the lowest rates in the market - between 10.25% and 10.4% - for home loans.

It also offers the cheapest car loans at 10.75%.

Bank data released by RBI last weekend showed that in July 2012, non-food credit growth slowed down to 16.5% as compared to 18.6% in June this year and 18.9% in July 2011. Growth across key segments of industries and services has eased, clearly reflecting signs of moderation, said a report by Emkay Securities.

SBI is the only lender whose deposits grow at a faster pace than credit.

Overall for the banking industry, credit growth continues to outstrip the growth in deposits. For the fortnight ended August 10, RBI data showed that bank deposits had grown 14.3% (year-on-year) while bank credit grew 16.6%. As a result, banks (other than SBI) continued to borrow from RBI an average of around Rs 1 lakh crore.

A slowing economy could, however, ease the demand for credit. On Monday, Morgan Stanley cut India's 2012 GDP growth forecast further to 5% from 5.7%. "On a fiscal year basis, we have cut F2013 GDP growth from 5.8% to 5.1% (a 10-year low). We believe that GDP growth for the next two quarters will be sub-5% as weak monsoons and slowdown in external demand hamper growth," it said in a report.

A few days back, Union Bank of India cut interest rates on vehicle loans to 10.95% (0-7 years) with immediate effect. Earlier, the rates were in two slabs - 12.5% and 13.5%.

Around the same time, Dena Bank also announced a reduction of 1-2% in rates on most of its personal loans.

The Central Bank of India also brought down interest rates on home, vehicle and other retail advances such as personal loans by 2% this week.

+

State Bank of India, Bank of India allowed to operate in Pakistan

Singapore, Aug 23: India and Pakistan have agreed to allow two banks each from both the countries to set up branches across the border, Governor of the State Bank of Pakistan, Yaseen Anwar said today.

“We have held discussions with the Reserve Bank of India and both sides have agreed to issue a full banking licence to two banks of each country,” Anwar told PTI on the sidelines of a conference organised by Institute of South Asian Studies.


The two Indian banks that will be allowed to operate in Pakistan are State Bank of India (SBI) and Bank of India (BoI).

On the other hand, quasi-state owned National Bank of Pakistan and privately-owned United Bank Ltd. will be running full-banking operations across the border, once licensed by India.

“It will take few months to approve Indian banks’ licences on receiving them,” he said.

“We are ready to go tomorrow to India” to set up banking operations, Anwar said.

Discussions have been held with RBI Governor D Subbarao to issue banking licences, he said, adding that the process will help normalise trade relations between India and Pakistan.

Meanwhile, officials from the Bank of India in Singapore have recently visited Karachi for setting up an office in Pakistan, said Syed Hasan Javed, Pakistan High Commissioner to Singapore.

+

ank employees on two-day strike from Wednesday

Mumbai: Banking services such as cheque clearing may get disrupted for two days beginning Wednesday with the United Forum of Bank Unions (UFBU), an umbrella body of nine employee unions, threatening a strike.

Employees of 27 public sector banks, 12 private lenders and eight foreign banks will stay off work to protest the government’s decision to pass an amendment to the banking laws bill, expected to come up for discussion in Parliament on Wednesday, according to C.H. Venkatachalam, convenor of UFBU.


The unions claim the proposed legislation will promote privatization of Indian state-run banks and give more powers to foreign investors and Indian corporations in the running of private banks.

They are also against the Khandelwal committee’s recommendations for introducing variable pay in public sector banks and 50% direct recruitment of bank officers from the market.

The Indian Banks Association, an industry lobby of lenders, said banks will save up to Rs. 400 crore in terms of wages to the striking employees.

The unions decided to strike work after a meeting with the chief labour commissioner in Delhi on Tuesday ended inconclusive.

+