State Bank of India executive in bribery probe put on leave

State Bank of India (SBI.NS_0">SBI.NS) said it had asked a deputy managing director of the bank, Shyamal Acharya, who is under investigation by the CBI in an alleged bribery case, to go on leave.

The police said they had put the deputy managing director under investigation in the case, in which he is alleged to have received Rolex and Omega watches after approving a loan to Worlds Window Group, a metals trading company.

"Incriminating documents recovered during searches are being scrutinised for further investigation," the Central Bureau of Investigation (CBI) said in a statement on Monday.

State-run SBI, the country's biggest bank, said that a committee of two managing directors would investigate the matter internally.

A spokeswoman for Worlds Window Group denied the company paid a bribe to anybody and said it was seeking legal advice.

Reuters was not able to reach Acharya on his mobile phone.

SBI said it is cooperating with the CBI. The bank also said: "We stand committed to probity in our dealings and assure that SBI will continue to hold highest standards of honesty and transparency in its operations."

Indian officials have said the CBI has been scrutinising the 30 biggest defaults at Indian banks for any evidence that borrowers colluded with bankers for personal gain. CBI spokeswoman Kanchan Prasad said the SBI case announced on Monday was not part of that probe.

More: http://in.reuters.com/article/2013/11/25/sbi-investigation-idINDEE9AO0DP20131125

SBI hikes base rate, EMIs to go up

India's largest lender, State Bank of India (SBI), raised its base lending rate by 20 basis points (bps) to 10% on Wednesday, pushing up EMIs across the board, including on home loans. The state-owned lender also raised its benchmark prime lending rate by 20 bps to 14.75%. The bank stated the increase in rates would be applicable from Thursday.

"If you see, since September 20 the repo rate has gone up by 50 bps and so we thought it necessary to raise these rates. But having raised them, we tried to raise it to the minimum extent possible. Even after raising, we continue to remain one of the cheapest in the market," Arundhati Bhattacharya, chairperson, SBI, told FE.

SBI has become the second bank to have raised its base rate after the Reserve Bank of India (RBI) announced its quarterly monetary policy on October 29, where it raised the repo rate by 25 bps to 7.75%, while cutting the marginal standing facility (MSF) by the same quantum to 8.75%.

Private sector lender HDFC Bank too raised its base rate by 20 bps to 10% on Tuesday.

Analysts see the rate action by SBI as a way to protect net interest margins (NIM) in the bank's domestic business. Domestic margins for the bank have registered a constant downward trend in every quarter since March 2012. From a 4.17% NIM reported as on March 31, 2012, it dropped to 3.44% in the quarter ended June 30, 2013.

"This action is not to align with the market. This has got to do with the increase in repo rate and the impact on margins. SBI has always been cautious of its NIM position and deposit rates are still quite firm. The only rates they could tinker with are the lending rates," said Rajiv Mehta, an analyst with IIFL.

When asked whether the hike in base rate will affect SBI's credit growth, Bhattacharya said the recent spike in credit growth witnessed by the banking system was due to high interest rates in the short-term money market. As commercial paper (CP) rates soared during August and the first half of September, corporates found it unaffordable to raise funds and thus shifted to the cheaper bank loan market, resulting in an impressive credit of 17%-18% for the banking system.

"As CP rates are correcting, the CP portion of the demand has moved back. But you must remember the busy season is starting, so we expect to see 17%-18% credit growth this year," she said.

Last week, India's largest lender had cut interest across maturities on deposits worth over R1 crore by 25-200 bps. However, it left the interest on most retail deposits (worth less than R1 crore) untouched, except the 180-210 day maturity bucket which it hiked by 20 bps.

Experts say even though short-term rates have fallen by over 100 bps since September 20 — when RBI first announced a partial reversal of its liquidity control measures by cutting the MSF rate — this will barely have an impact on SBI since the bank relies mostly on retail deposits.

While SBI and HDFC Bank have already announced lending rate hikes, other large banks are ruling out rate hikes and are watching the situation closely. Ranjan Dhawan, executive director, Bank of Baroda, told FE that his bank is not considering an increase in base rates in the near future.

On September 19, SBI had last hiked its base rate by 10 bps to 9.8%, while also hiking the spread it charged over the base rate on home and auto loans.

More: http://www.financialexpress.com/news/sbi-hikes-base-rate-emis-to-go-up/1191599/0

SBI, Dena bank cut consumer durable, car loan rates

The State Bank of India (SBI) on Wednesday reduced interest rates on auto loans, slashed processing fees and launched consumer loan products for salaried employees, while Dena Bank lowered home loan and auto loan rates. The banks joined a clutch of other public sector banks that announced rate cuts to lure the customers in the ongoing festival season.


The country’s largest lender, SBI, has slashed interest rate on auto loans by 0.20 percentage points to 10.55% against the earlier 10.75%.

“Processing charge has also been cut from 0.51% of the loan amount with a minimum of Rs. 1,020 to a flat rate of Rs.500,” SBI said in a statement.

SBI has also launched a special festival loan for its salary account holders for purchase of consumer durables and two-wheelers.

Dena Bank has cut interest rates on car loan by 1 percentage points to 11% from 12%. It has pegged its home loans at 10.25% for loans up to Rs. 1 crore.

For consumer loan, in case of tie-up under corporate salary scheme rate of interest has been reduced by 1 percentage point to 12%.

On Tuesday, Punjab National Bank, IDBI Bank and Oriental Bank of Commerce announced rate cuts or waived the processing fee on some loans as part of their festival offers.

The decision to cut interest rates on auto and consumer durable loans comes nearly a week after the government decided to pump in funds in public sector banks so that they can lower rates to stimulate demand in the targeted sector.

Credits: hindustantimes

War on non-performing assets to intensify, new SBI chief says

The new chief of the country's largest bank has said that the war on non-performing assets has intensified and that non-performing managements have no reason to continue being in office.

"There is no way that anybody can say that the war against NPA is over or that we are going to lessen the intensity. If anything, we are going to increase the intensity. Besides continuing to do what we did, we will use a lot of weapons to control the NPAs," said Arundhati Bhattacharya, chairperson, SBI, in her first interaction with the media after taking charge.

According to Bhattacharya, the new weapons would be analytics using information technology. The bank will also rationalize structures on how NPAs are managed and who takes up the issue within the bank and at what stage in order to get better and quicker responses.

"We will also be looking at how to cut down the time span that we normally take for resolving NPAs by cutting down processes so that the turnaround time is less," she said. In the case of retail and farm sector, the bank is focusing on creating teams that will get down to the grassroots and contact each and every defaulting borrower and ask them to repay. According to Bhattacharya, controlling NPAs will help the bank improve other ratios such as return on equity and return on assets.

Elaborating on the scope for changing managements of defaulting companies, Bhattacharya said, "At this point, it is very difficult to bring about a change in managements, partly because earlier we did not take pledge of promoter shares. Also, while trying to sell a particular unit, there are issues. For instance, in businesses such as aluminium and steel, the permits for the ore are with other companies. But having said that, everyone in the banking industry agrees that should the management not perform, they have no right to be there and they should be changed."

On the changes that she proposes to bring in as the first woman chief of SBI, Bhattacharya said, "As a woman, I think that some problems are peculiar to women. I would try and be more sensitive to them. When I was in SBI Caps, we introduced a 6-year sabbatical for employees without pay as against 13 months in SBI. Any employee can take three sabbaticals of two years each." The only condition was that the sabbatical was available to only 5% of employees on first come, first served basis as it was a small organization.

Bhattacharya said that women usually take a break three times in their career. One is when they get married and have children. Second, when their kids are in class 10 or 12 and the third, when either parents or in-laws fall sick. "Whether I can replicate this sabbatical in SBI, I don't know," said Bhattacharya. However, she said that she has already taken a decision in the bank to remove the cap on the number of transfers that an employee can seek on account of a spouse relocating.

Credits: timesofindia

SBI lags in business, profits per employee: RBI report

State Bank of India is number one in many aspects but when it comes to business and profits per employee, the country's largest lender ranks below the national average, says a Reserve Bank report.

As per the latest data on Indian banking sector, the business per employee of SBI in 2012-13 was Rs 9.43 crore, while the all banks' aggregate was Rs 12.13 crore.

Every employee on an average contributed Rs 6.5 lakh to the bank's profit in the last fiscal, according to 'A Profile of Banks: 2012-13', released by RBI.

Credits: timesofindia