SBI plans to raise Rs 2,000 cr via Basel-III bonds

State Bank of India plans to raise Rs 2,000 crore by allotting Basel-III compliant bonds to various investors.

“The committee of directors for capital raising accorded its approval today to allot 20,000 AT1 Basel-III compliant non-convertible, perpetual, subordinated bonds in the nature of debentures... aggregating Rs 2,000 crore to various investors,” SBI said in a regulatory filing on thursday.

The country's largest lender said the bonds will carry a coupon rate of 8.15 per cent per annum with a call option after 5 years or the anniversary date thereafter.

SBI shares were trading 1.67 per cent lower at Rs 302.50 on the the BSE


Source : Thehindubusinessline

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Cost of credit, NPA positioning restricting banks to cut MCLR: SBI

The SBI on Thursday said that though the Marginal Cost of Funds-based Lending Rate (MCLR) is expected to be in tandem with the policy rates, banks are hesitant to reduce it due to cost of credit and deposits and NPAs positioning.

The Reserve Bank of India (RBI) on Wednesday cut the key lending rates by 25 basis points (bps).

"As far as the MCLR is concerned, it is a function of multiple components. It is intended that the MCLR is in tandem with policy rates," State Bank of India (SBI) Managing Director and Chief Executive Officer Dinesh Khara told BTVi in an interview.

"But other factors like the cost of deposit and cost of credit -- which are a critical determinant of MCLR -- and also non-performing assets (NPAs) positioning, are restricting banks from cutting the MCLR... the policy rates are a critical component but not the only component affecting the MCLR," he said.

The banking system is rolling into a lot of liquidity and they would like to deploy that liquidity into the right kind of investments and projects coming up for consuming this kind of liquidity, Khara said.

The advances growth in general is 6 per cent in the current fiscal while the retail advances are doing well at 10-12 per cent.

Retail advances are still linked to base rate while the corporate advances are getting aligned to the MCLR.

"Banks are willing to lend at the right kind of price. But when it comes to investment demand from corporates, that is yet to be seen. My sense is that economic activity through private investment gets revived," he said.


Source : Economic Times

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Fee on IMPS transactions under Rs 1000 removed by SBI

State Bank of India (SBI) on Wednesday waived charges on all money transfers of less than Rs 1,000 made through the Immediate Payment System (IMPS) channel, in a bid “to promote small ticket size transactions”. Earlier, any IMPS transfer of up to Rs 1 lakh out of an SBI bank account would attract a charge of Rs 5, in addition to service tax. Those remitting amounts between Rs 1,000 and Rs 1 lakh will continue to shell out the charge of Rs 5. The charge on transactions of over Rs 1 lakh and less than Rs 2 lakh will also remain unchanged at Rs 15. The applicable Goods and Services Tax (GST) rate will apply to all IMPS transactions of over Rs 1,000.

The reset in IMPS charges puts SBI at a disadvantage to its private sector peers. HDFC Bank, SBI’s closest rival in terms of asset-book size, earns a fee on all outgoing IMPS transactions. Account holders at the bank have to pay Rs 5 for all transfers of up to Rs 1 lakh and Rs 15 for transfers of between Rs 1 lakh and Rs 2 lakh. The charges are the same at ICICI Bank. Among other large state-owned lenders, Bank of Baroda (BoB) does not levy any charge on IMPS transactions, while Punjab National Bank (PNB) charges Rs 5 for all IMPS transactions, according to the banks’ websites.

Sources in the know said that SBI’s decision to waive charges on some IMPS transactions may have been the result of more than a nudge from the government. “We have almost been arm-twisted into doing this,” said a senior banker on condition on anonymity.

The waiver is likely to impact a sizeable chunk of IMPS users. While bank-wise data for IMPS transactions is unavailable, SBI is widely accepted to be the market leader in terms of digital transactions in general and internet banking in particular. It has a 52% market share in mobile banking, deputy managing director Manju Agarwal had told FE in March.

Like most other modes of digital payments, IMPS had seen a surge in transaction volumes amid the cash crunch arising from the government’s November 8 decision to withdraw high-value currency notes from circulation.

IMPS volumes in June added up to 65.8 million, 82% higher than the November figure of 36.2 million transactions. Transaction values for IMPS aggregated Rs 59,650 crore in June, 83.6% higher than Rs 32,480 crore in November. This puts the average IMPS transaction value at around Rs 9,065.



Source : Financial Express

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SBI launches INTOUCH, digital village initiatives in Nepal

The State Bank of India (SBI) has launched its flagship service INTOUCH in Nepal, an official spokesperson said here on Saturday. The sbiINTOUCH, inaugurated by SBI Chairperson Arundhati Bhattacharya, will offer customers products like Savings Bank, Saral Bachat Account and Combo Savings Account and the branch will have facilities like kiosks for account opening, debit card printing, and ATM. Bhattacharya, along with its subsidiary, Nepal State Bank Ltd (NSBL) also inaugurated the NSBL Digital Village, Jaharsing Pauwa, which would be the first of its kind digital initiative in Nepal banking industry along with INTOUCH, on Friday.

Under the Digital Village Initiative, the NSBL has adopted Jaharsing Pauwa village to provide financial literacy centres and other banking facilities to the 2,200 villagers. The services to the 443 households would include an internet banking kiosk, free WiFi, POS utility at four merchant outlets, cash recycle machines.

In the non-banking services, the villagers will get solar street lights, medicines and medical equipments to the local health centres, books and stationery to the village government school and other facilities under the NSBL’s CSR activities. Both the initiatives are unique to the Nepalese banking industry and first time taken by an foreign offices of the SBI.

The SBI has experience of making 21 Indian villages digital with a target of 101 in the next few months, and it has 250 outlets under sbiINTOUCH. The NSBL is among the fastest growing commercial banks in Nepal and enjoys a lead position in terms of penetration of technology products. NSBL is a JV between SBI and the Employees Provident Fund, Nepal, the spokesperson said.



Source : Financial Express

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PSB mergers should be between equals: SBI Chief Arundhati Bhattacharya

State Bank of India chairman Arundhati Bhattacharya said the merger of public sector banks should be between equals and added that things will start getting better on asset quality by the second half of the year. In an exclusive interview to ET, Bhattacharya said union of state-run banks is feasible but the lenders should be given time to ensure the mergers work.

There can’t be a one-size-fits-all approach, and the temptation to merge the weaker ones with the stronger ones should be resisted as it leads to the stronger one losing strength, she said.

“It (merger of banks) is feasible. It has been done in other countries. But you will have to give them time to do it and be able to show a turnaround. You cannot expect it to happen tomorrow and (hope that) day after things will be fine.

It won’t work like that. They will need 3-4 quarters to put it all together and come out on top,” Bhattacharya said.

The clamour to merge 21 PSU banks is getting louder with the government nearly shutting the capital tap. While investors are likely to provide capital to strong ones like SBI, which raised Rs 15,000 crore in a share sale, many others are likely to be shut out from the market. Some will have to be merged so that the capital requirement comes down and resources are better utilised.

“The smaller SOE (state-owned banks) are short of capital and it will be a struggle for them to raise funds unlike the larger banks, which may be able to access equity markets,” said Sumeet Kariwala, analyst at Morgan Stanley.

“Hence, the government may look at merging smaller, weaker banks with larger and relatively stronger lenders.”

Bhattacharya, however, said that may not be the right thing to do. The chief of SBI, which recently completed the merger of six banks with itself, said there should be a merger of equals so that synergies can be derived.

“It should be strong to strong and weak to weak, because if you do a strong and weak it doesn’t really make much sense since it unnecessarily pulls down the strong bank also to some extent,” she said. “And, of course, they need to look at other synergies… there might be synergies of systems, synergies of reach, synergies of different portfolios of business, synergies of cultural fit.

So it cannot be one size fits all.” Banks’ journey to becoming stronger entities may be full of surprises and painful events, but that is inevitable in the process of growing up, she said. “The alternatives are very few, so to that extent this seems to be the best way out,” said Bhattacharya.

“And, probably, this will be painful. But a maturing process and growth is always painful. You ask any teenager they will tell you, and it’s just like that for the country. We need to grow, we need to evolve.”


Source : Economic Times

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SBI to offer GST-ready solutions starting today

The largest lender State Bank of India (SBI) on Saturday announced its Goods and Services Tax (GST) ready solutions, including the introduction of online payment through internet banking and debit card. Starting today, the SBI account holders can deposit GST of upto Rs. 10,000, in cash, cheque or draft form at any of the SBI branches across the country. Ending more than 11 years of hectic argument among the Centre and the states, the GST will implement from July 1 to completely transform the indirect taxation landscape in the country involving both the Central and State levies. In a departure from the normal practice, GST will be administered together by the Centre and States. The biggest tax reform since independence – GST – will pave the way for

The biggest tax reform since independence – GST – will pave the way for realisation of the goal of One Nation – One Tax – One Market. It will benefit all the stakeholders namely industry, government and consumer as it will lower the cost of goods and services give a boost to the economy and make the products and services globally competitive, giving a major boost to ‘Make in India’ initiative. Under the GST regime, exports will be zero-rated in entirety unlike the present system where refund of some of the taxes does not take place due to fragmented nature of indirect taxes between the Centre and the States.

However, GST will make India a common market with common tax rates and procedures and remove economic barriers. GST is largely technology driven and will reduce the human interface to a great extent. GST is expected to improve ease of doing business in India.


Source : Financial Express

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SBI urges government to ease provisioning

The country’s largest bank, the State Bank of India, has written a letter to the finance ministry raising concerns over the stringent provisioning norms for companies under the Bankruptcy Code, which will eat into its profit margins. The lender is reluctant to meet these norms and has sought the ministry’s intervention on the matter.

A senior executive with the lender confirmed the development and said that the government is expected to hold discussions with the Reserve Bank of India, state-run lenders and the Bankruptcy Board. An email sent to both SBI and RBI did not elicit any response till the time of going to press.

RBI, in a circular issued to banks on June 15, had stated that for accounts identified for resolution under the Insolvency and Bankruptcy Code, 2016 (IBC), lenders will need to make a minimum provision of 50% for the secured portion of the outstanding amount, plus an additional 100% on the unsecured portion.

Last month, RBI identified 12 stressed accounts, each having more than Rs 5,000 crore of outstanding loans and accounting for 25% of total NPAs of banks for immediate referral for resolution under the bankruptcy law.

“Under IBC, banks can initiate proceedings at the first instance of default to preserve the value, but if they are referred to National Company Law Tribunal (NCLT) then, under the recently issued guidelines by the regulator, we will have to make at least 50% provision, while the account is standard in our books,” the above quoted SBI official said. Under RBI rules, a loan becomes nonperforming if the interest or installment of principal remains overdue for more than 90 days.

“So, if a bank is making the existing standard asset provision of 1%, it will be reluctant to refer the account to NCLT early because of the high provisioning requirement,” this executive said.

The bank has also said that post any resolution under the IBC framework, banks should be permitted to upgrade the sustainable portion of debt to standard and should not need to make any further provisions. “Banks should rather be allowed to reverse any such provisions made earlier as this will free up more capital and take on more such cases for resolution,” said another executive with SBI aware of the correspondence between the bank and the finance ministry.

The bank has also demanded that if any other creditor takes the NCLT route, no additional provisioning should be mandated on that particular account. Experts, however, disagree with the banks and say that the provisioning requirement of Rs 50,000 crore as being projected is on the higher side.

“The concerns raised by the bank are short term and perhaps narrow,” said Sumant Batra, managing director – insolvency at Kesar Dass B & Associates.

Banks should not tie themselves on the provisioning issue but rather look to maximise the value that they may get by moving quickly under IBC, he added. “Also, these 12 cases will not form the benchmark given the fact that going forward we will have other kind of cases, which may not be under joint lenders forum, and the dynamics of these cases will be different from the existing ones,” he said.



Source : Economic Times

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12 large NPAs: SBI chief rules out big hit on bottomlines

The nation's largest lender State Bank today ruled out the additional provisioning towards the 12 largest NPA accounts which have been referred to insolvency proceedings denting the bottomlines very hard as most of the provisioning has already been done.

"The increased provisioning requirements, more or less, in all of these accounts we have pretty large provisions. But yes, we have to make a little more but it should not very badly impact our earnings going forward," chairman Arundhati Bhattacharya told reporters after the AGM here this late evening.

She was responding to questions from the media about the possibility of increased provisioning towards the 12 RBI- referred accounts impacting the bank's bottomlines.

It can be noted that domestic ratings agency Crisil had yesterday estimated that led by public sector banks, lenders will have to take a huge haircut towards these NPAs.

It has pegged an additional burden of Rs 40,000 crore or 25 per cent more towards provisioning for these 12 accounts which have been sent for insolvency by RBI.

These 12 large accounts had become NPAs by end-March 2016 and Crisil estimates show the banks had already provisioned 40 per cent for these NPAs worth Rs 2 trillion or about Rs 80,000 crore.

"We estimate a 60 per cent haircut would be needed on these loan assets. That would mean banks will have to increase provisioning by another 25 per cent or Rs 40,000 core more this fiscal, compared with 9 per cent in the last," Crisil said in a note.

The total NPA provisioning of banks stood at Rs 2.2 trillion as of FY17, up from Rs 2 trillion in FY16.

Parrying a question on whether RBI has been very stringent or overcautious on with these accounts, she said "the regulator has done what it felt was right. Now whether it is overcautious or whether it is in order, we will come to know with time."

"The only thing is that they have given us three quarters to do it which I think is adequate. Also, provisioning doesn't mean write-offs. It merely means that you keep the provisions if things are better, and then we can write it back," the chairman of SBI which is the lead banker to six of these 12 accounts said.

But she was quick to point out that the problem with higher provisioning is that "if a buyer comes to take over that account will immediately take that as the lowest level of write-off or haircut. So, to that extent, we may have realised better value if we haven't exactly quantified the amount of provisioning that we made."

Bhattacharya said the remaining six accounts from the RBI list will be taken up within the stipulated time of 15 days itself or even earlier.

"All the preparation that were required to be done most of them is already done. To that extent we are doing things as per book. And we expect that this will enable quick resolution," Bhattacharya said.

The largest 12 accounts named by RBI are Bhushan Steel (Rs 44,478 cr), Lanco Infra (Rs 44,365 cr), Essar Steel (Rs 37,284 cr), Bhushan Power (Rs 37248 cr), Alok Industries (Rs 22,075 cr), Amtek Auto (Rs 14,075 cr), Monnet Ispat (Rs 12,115 cr) Electrosteel Steels (Rs 10,274 cr), Era Infra (Rs 10,065 cr) Jypaee Infratech (Rs 9,635 cr), ABG Shipyard (Rs 6,953 cr), and Jyoti Structures (Rs 5,165 cr).

Of these six accounts have already been sent to NCLT by banks -- Bhushan Steel, Essar Steel and Electrosteel Steels by SBI; Bhushan Power by PNB; Lanco Infratech by IDBI; and Amtek Auto by Corporation Bank- for possible liquidation.



Source : Economic Times

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SBI makes home loans cheaper, cuts rate by up to 25 bps; but analysts don’t see a rush by buyers anytime soon

Even as home buyers put off purchases in anticipation property prices could correct, State Bank of India (SBI) on Monday made home loans cheaper for new customers. Loans of up to Rs 30 lakh will cost women 8.35% and others 8.4%; that’s 25 basis points (bps) less than rates available a few months ago. Women borrowing more than Rs 30 lakh will need to pay an interest rate of 8.5% while others will cough up 8.55%.

Rival ICICI Bank charges salaried persons an interest rate of 8.7% for loans up to Rs 75 lakh while mortgage specialist HDFC charges between 8.5% and 9% for a loan of up to Rs 75 lakh. So far, Bank of Baroda’s product is the most attractive at an interest rate of 8.35%.

With little demand for corporate loans, lenders are trying to make mortgages more affordable. A CLSA report says mortgage rates are at 12-year lows, having dropped 150 bps in the last two years; every cut of 100 bps is equal to a 5-6% price cut, CLSA notes.  But this may not be enough to nudge buyers; loans for housing grew at a slower 15.2% year-on-year (y-o-y) in March compared with 18.8% growth in March 2016, data from the Reserve Bank of India (RBI) show.

Clearly, there’s no rush. Stocks of unsold apartments are piled high and even before demonetisation, inventories were not small. At last count, there were 6.7 lakh unsold residential units across the country with 1.55 lakh in the Mumbai Metropolitan Region (MMR) alone. Registrations of property sales in MMR, which had fallen to a six-year low in November and December, remain low.

If 2016 ended with the lowest number of residential launches and sales, 2017 hasn’t got off to a great start, say builders. Banks, however, are trying to prod potential customers to buy homes. SBI had revised rates in January, effecting a steep 90 bps cut to its one-year MCLR, and bringing it down to 8%. ICICI had cut its one-year MCLR by 70 bps to 8.2% and HDFC had lowered its benchmark rate by up to 45 bps.

The country’s largest lender is also hoping to cash in on the push to affordable housing. “We have come out with a special offering of lower rates for the category,” said Vaijinath MG, CGM (real estate and housing), SBI.

The general slowdown in home purchases is hurting developers. Gopal Sarda, group CEO, Kolte-Patil Developers, told FE, “The real estate market had seen some fluctuations in recent times. The implementation of demonetisation and the introduction of RERA (Real Estate Regulation Act) and GST (goods and services tax) only made home buyers delay their decision of home buying.”

In March, the government had raised the annual income ceiling for families eligible under the credit-linked subsidy scheme (CLSS) to up to Rs 18 lakh. The move, however, is likely to benefit housing finance companies (HFCs) rather than banks, analysts say.

According to a report by Crisil, that the assets under management of pure-play affordable HFCs have risen nearly 50% in the past fiscal to Rs 23,000 crore as on March 31. “The high growth has also led to increase in market share of these new pure-play players in the overall affordable housing finance sector from ~10% as on March 31, 2016 to ~15% as on March 31, 2017,” the report said. Crisil defines affordable housing loans as those with a ticket size less than `15 lakh.


Source : Financial Express

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Shareholders to elect 4 independent directors of SBI on Jun 15

The country's largest lender SBI has invited applications for appointment of four independent directors to its central board who will be elected by the public shareholders on June 15.

The election has been necessitated after the resignation of Sunil Mehta and the expiry of the three-year-term of the three other directors -- Deepak Amin, Sanjiv Malhotra and MD Mallya, the bank said in a notice.

The term of appointment for the four new directors will be for three years till 2020, and the election will be held during the forthcoming general meeting of shareholders on June 15, it said.

"The election of directors is being held to fill in the vacancies arising out of the retirement/resignation of the four directors elected by eligible shareholders of the bank, other than the government," it said.

Any shareholder having not less than 5,000 shares either in his/her name or as first named holder when jointly held, is eligible to contest the election.

Led by chairman Arundhati Bhattacharya, who is on an extension till September, the central board of SBI comprises four independent directors, two government nominees, one representative from the Reserve Bank and also four of its managing directors.

Nomination form and the format of declaration and undertaking to be submitted by shareholders is available with the secretariat of the chief general managers at all the local head offices and the central board secretariat at the Corporate Centre of the bank in Mumbai.

The final date for submitting the documents is May 24, the notice said.

If the total number of valid nominations exceed four, there would voting for the election at the general meeting.

Any shareholder other than government with over 50 shares each for a minimum of three months prior to the date of the general meeting will be eligible to vote in the election, the public notice said.



Source : Economic Times

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Bad debt situation not that grim, recovery hopes intact: SBI chief Arundhati Bhattacharya

State Bank of India, the country's largest lender, today said most of the nation's bad loans belong to industries that are still in business and banks will probably recover the write-downs when growth turns up and they perform again.

Speaking at a seminar on 'Asian Banking in Challenging Times' here, SBI Chairman and Managing Director Arundhati Bhattacharya said the loans which have turned bad are because they are not producing enough money to cover their interest liability.

And the reasons for that have been huge time overruns, leading to cost overruns, which lead to over leveraged positions, she said.

About 16.6 per cent of loans to corporates - or about 8.4 per cent of the GDP - had been declared non-performing, according to Credit Suisse.

Banks are straddled with anywhere between Rs 9 lakh crore to Rs 12 lakh crore of stressed assets - made up of bad loans, restructured debt and advances to companies that cannot meet servicing obligations.

The government yesterday through an ordinance amended law to give powers to the Reserve Bank of India (RBI) to order banks to initiate insolvency proceedings against defaulters and to create committees to advise them on recovering non- performing loans.

"I still believe we have huge potential in the country. The difference of the NPLs (non-performing loans) this time around is the fact that many of the NPLs are assets that are still working," she said at the seminar held on the sidelines of annual meeting of the Asian Development Bank here.

To set this NPL cycle right would need dilution of equity, paring down of debt and finally leaving the asset with debt that ensures that it can be sustainably serviced, Bhattacharya said, adding this will ensure that these units get the support to enable them to raise their capacity utilisation.

"In view of the fact that our economy is still growing so there is demand over there which has to be properly nurtured and may be also channelised. If you do that, many of these units will probably come back and the write-downs that we will take will probably, not surely, but probably, we will be able to claw back at some point of time," Bhattacharya said.

She said the Indian banking sector faces headwinds both in respect of over-leveraged corporate debt and "stiffer" regulatory requirements.

The biggest challenges faced by the regulators, she said, was how to handle the bad debt situation to ensure that the resources are not wasted.

"On the other hand they have to ensure that they are perceived as being conservative and they are perceived as doing the right thing for right reasons. So I think this is the challenge that we as a country have and the regulators have as well," Bhattacharya said.



Source : Economic Times

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SBI ATM in Odisha spews out cash automatically, bank suspects malware attacks

State Bank of India has ordered a forensic audit into an automated teller machine in Odisha that spewed out cash without any card being swiped. It's one of about 10 cash dispensers around the country belonging to various banks that have behaved in this manner.

The suspicion is that these are localised hacks on machines running outdated software but don't involve any wider network infections.

"A forensic audit is currently underway and we are trying to understand whether a software malfunction caused the glitch in its systems," said a senior State Bank of India official.

"Typically, an audit takes around four to six weeks to be completed we should get the report within the end of this month."

Experts said the ATMs may have been subjected to a 'physical' malware attack that involves plugging a device — say a laptop or phone — into the dispenser's USB port to transfer an infected file or virus that causes the machine to behave erratically. The anomalies have been witnessed in states such as Odisha, Jharkhand, Uttar Pradesh, said people with knowledge of the matter.

"Around 10 ATMs have been affected as per preliminary information," said Navroze Dastur, managing director of India and South Asia operations at NCR Corporation, which sells and maintains ATMs.

"The Reserve Bank of India is aware of the situation and we are closely working with National Payments Corporation of India to tell banks what security measures are needed to protect the machines." The note spewing hasn't caused a big dent but SBI is looking to get to the root of the matter.

"This has not caused a significant loss to the bank because the money kept in a single machine is usually less than Rs 10 lakh and directly no customer account has been affected since no card was swiped," said the SBI official.

"The audit is being done to understand how it can be rectified." Experts pointed out that a number of machines are running obsolete Windows XP software, which Microsoft has stopped updating. "Banks mostly do not service and update these machines on time, which makes them vulnerable to highly sophisticated attacks as fraudsters use the most advanced technology available," said a top executive at an ATM deployment company.

Initial reports suggest the criminals target machines in remote locations that are usually left unguarded, allowing them to open the outer casing to access the USB port. Once infected, the machine can be remotely controlled by a virtual keyboard and instructed to spew out cash.

"There are keys available which allow an ATM to be opened by unauthorised persons as well and then it needs to be connected to a system through a cord to transfer the virus," said Altaf Halde, managing director for South Asia at Kaspersky Labs, a cyber security firm. "Leading banks and ATM service providers of the country have reached out to us to understand the threat and how it can be dealt with."



Source : Economic Times

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Bharatiya Mahila Bank to merge with SBI

The Government of India has decided to merge the Bharatiya Mahila Bank (BMB) with the State Bank of India (SBI) to ensure greater banking services outreach to a larger number of women, at a faster pace. The objective is to offer affordable credit to women as well as propagate women-centric products, which need to be quickly achieved through a wider network and lower cost of funds.

The decision to merge BMB with SBI has been taken in view of the advantage of the large network of SBI among other things. In the three years since BMB was established, it has extended loans of Rs.192 crore to women borrowers, while the SBI group has provided loans of about Rs.46,000 crore to them. SBI has a large outreach of more than 20,000 branches, with lowest cost of funds in the sector.

Out of the total workforce of around 2 lakh employees in SBI, 22 percent are women. SBI group already has 126 exclusive all-women branches across the country, while BMB has only seven. The proportion of administrative and managerial cost in BMB is much higher to reach the same coverage.   For the same cost, a much higher volume of loans to women could be given through SBI.

However, Union Government is committed to enhance the access to financial services to the population at large and women in particular. Under the Pradhan Mantri Jan-Dhan Yojana, preference is given to women for overdraft facility. Pradhan Mantri Mudra Yojana had 73 percent women borrowers in the previous financial year.


Source : Financial Express

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Branches of associate banks to operate as SBI branches from April 1

All the branches of State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT) will function as branches of State Bank of India from April 1, 2017.

All the customers including depositors of these banks will now be treated as customers of SBI from April 1.

The cabinet had approved the proposed merger of State Bank of India (SBI) and five subsidiaries in February this year.



Source : Economic Times

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SBI to shut down 47% of associate banks' offices post-merger

State Bank of India (SBI), which will see five associate banks merge into it on April 1, has decided to shut down almost half the offices of these banks, including the head offices of three of them. This process will start from April 24.

"Out of the five head offices of the associate banks, we will retain only two. Three head offices of the associate banks will be unbound along with 27 zonal offices, 81 regional offices and 11 network offices of the associate banks," SBI Managing Director Dinesh Kumar Khara told IANS in an interview.

"We will keep their structure in place till April 24 and, post that, we will start dismantling the associate banks' controlling offices, which includes head offices, regional offices, zonal offices and network offices," Khara said.

The five associate banks that will merge with SBI are: SBBJ (State Bank of Bikaner and Jaipur), SBM (State Bank of Mysore), SBT (State Bank of Travancore), SBP (State Bank of Patiala) and SBH (State Bank of Hyderabad).

SBI is India's largest bank with assets of Rs 30.72 lakh crore and figures at No. 64 in the global ranking of banks (as of December 2015; December 2016 ranking is still awaited). Post-merger, with assets of approximately Rs 40 lakh crore, it will be among the top 50 banks in the world. SBI Chief Economist Soumya Kanti Ghosh told IANS that, post-merger, the bank will be at No. 45.

The move is to avoid overlapping offices in the same area and "we intend to remove any kind of duplicacy in the controlling structure", Khara said.

The five associate banks will cease to exist as legal entities and become a part of SBI from April 1, but the various merger processes will start only after April 24, once the balance sheets of the five entities are audited and added.

"We will have to get the balance sheets of the associate banks audited a day prior to the merger, that is, on March 31. The balance sheets of the banks will be drawn up and added; it takes 15-20 days. Soon after the audit is done, the branches will be completely merged with SBI," Khara told IANS.

There are currently 550 SBI offices while its associate banks have 259. The target for the number of controlling offices after the merger is 687 -- a reduction of 122 offices.

Employees directly affected by these shutdowns -- estimated at 1,107 -- will be redeployed, mostly in customer-interface operations, Khara said.

"The net result is that people in controlling functions will be available for deployment on the ground for improving reach to the consumer," he said.

"There are about 5-7 people in every regional office and 20-odd people in each zonal office. One regional office controls 30-40 branches, while 4-5 regional offices are controlled by one zonal office," he told IANS.

The associate banks have also offered a Voluntary Retirement Scheme (VRS) to employees who do not wish to relocate. "VRS is only an option, else they will be relocated. They will have a different role," he said.

Along with the winding-up of these offices, a number of merger processes will come into effect simultaneously, including the data merger of the five entities.

"Data merger will also start from April 24 and we will finish it by May end. That is the plan of action," he said, adding that the bank had given itself six months to complete all merger-related processes.

"I would rather say that within a quarter all the things should be in order. Ideally, we would like to have it in one quarter, but it will not spill over beyond the second quarter," Khara said.

SBI says the merger will be done seamlessly as it has the experience of two earlier mergers. State Bank of Indore was merged with SBI in 2010, while State Bank of Saurashtra was merged in 2008.



Source : Economic Times

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Modi government, RBI may look at penal action, one-time settlement to fix bank defaulters

The Narendra Modi government and RBI are readying a strategy to deal with the bad loan problem, including a one-time settlement scheme for weak sectors and penal action against siphoning of funds. Sources tell ET Now that PMO, Finance Ministry and RBI are together working out a comprehensive strategy to nab top 50 defaulters.

Government and the central bank are awaiting the report from banks post completion of forensic audit on big defaulters, an official told ET Now on condition of anonymity.

"We are instructing banks to initiate forensic audit for all top 50 defaulters. We want to understand the nature of the defaults to see if it is a genuine case of business going bust due to sectoral issues or was money siphoned off. In case of siphoning of money, government will ask banks to initiate criminal action", said another source in the know of the development.

The department of financial services made a presentation to RBI last week at a high-level meeting on NPAs and has asked the central bank to overhaul the existing tools such as Joint Lenders Forum. Sources indicate that 3-4 banks with the highest exposure in JLF will be asked to make a decision for bad loans instead of the existing 60% voting requirement.

Moreover, PMO is also actively working on contours for a one-time settlement for bad loans. "Various bankers are worried to take decisions and agree to one time settlement options, so government lead panel is working on a one time settlement that will aid decision making", the source added

SBI recently announced one time settlement in the farm sector that make up about 6000 crore of doubtful cases on its books. Sources indicate that many more banks could look at similar mechanism for weaker sectors.

Gross non-performing assets in the banking system were estimated at around Rs7 lakh crore as of the end of December.



Source : Economic Times

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Farm loan waivers: As bad loans crisis in banks worsens, SBI chief Arundhati Bhattacharya warns of dangers ahead

State Bank of India (SBI) chairman Arundhati Bhattacharya on Wednesday made her reservations clear on the recurrent practice of waiving crop loans, stressing it disrupts credit discipline as borrowers expect more such relaxations in future. The statement came amid bankers warning of a worsening of the bad loan crisis, and days after the BJP secured a historic mandate in Uttar Pradesh where it had made a pre-poll promise to bring in a loan waiver scheme for farmers in the state.

“We feel that in case of a (agriculture) loan waiver there is always a fall in credit discipline because the people who get the waiver have expectations of future waivers as well. As such, future loans given often remain unpaid,” Bhattacharya said on the sidelines of a CII event in Mumbai. However, she added that the bank has not yet received any loan waiver proposal.

As of the first quarter of 2016-17, close to 10% of the Rs 86,000-crore farm loans in Uttar Pradesh, mostly disbursed by public-sector banks, are assumed to be impaired, according to a report by Kotak Institutional Equities. Out of Rs 13,300 crore worth farm loans extended by SBI in UP as of Q1FY17, 27% are overdue, the report said.

Bhattacharya said while it is important for banks to make credit available to farmers so that they can leverage and do better, it is also important to maintain credit discipline. She isn’t alone in questioning the policy of loan waivers and interest rate subvention. In 2014, then Reserve Bank of India governor Raghuram Rajan had said interest subventions and loan waiver could distort the price of credit and also lead to misuse of such schemes. Recently, RBI governor Urjit Patel said “steep interest rate subventions and large credit guarantees impede optimal allocation of financial resources and increase moral hazard” and, as such, these don’t solve the sector-specific issues.

Even the Rs 60,000-crore farm loan waiver scheme announced by the UPA government ahead of the 2009 general election attracted criticism from the Comptroller and Auditor General, which had said that 8.5% of farmers out of 80,299 accounts audited were not eligible for debt waiver.

Fresh crop loans to UP farmers have been to the tune of Rs 65,000-75,000 crore per annum over the last few years, or around 9% of the such loans to farmers in the country. “Crop loan disbursed to UP farmers during 2016-17 rabi season was around Rs 32,700 crore, and more than 95% of this was by commercial banks and the balance by cooperative banks. During the 2016 kharif period, fresh loans disbursed was to the tune of over Rs 30,000 crore, with a sixth of it by cooperative banks,” a UP finance department official had earlier told FE. Any waiver of these loans will likely add roughly 70 basis points to the state’s fiscal deficit.

The loan waiver promise comes at a time banks, especially the public-sector ones, are struggling with non-performing assets (NPAs). More than four-fifths of the NPAs are estimated to be in public-sector banks, where the NPA ratio had touched almost 12% compared with 9% across all banks as of September last year. The NPA ratio worsened by the end of December 2016. According to CARE Ratings, bad loans touched Rs 6,97,409 crore, or 9.3% of banks’ advances, by December last year, rising from Rs 4,37,859 crore a year earlier.

Meanwhile, the finance ministry on Wednesday said the rate of increase of bad loans has slowed in the current quarter of 2016-17. It added that the steel sector, with a significant exposure, shows sign of improvement and that the setting up of more oversight committees, along the lines of the one already established by the RBI, is under consideration to address the NPA crisis.

Speaking at the first meeting of the Consultative Committee (which has members cutting across political parties), finance minister Arun Jaitley said the government is taking sector-specific measures to deal with the NPA problem, specifically for the resolution of large cases of debts. The members of the committee suggested that the government set up the Public-Sector Asset Rehabilitation Agency (PARA), as mooted by the latest Economic Survey, and it should only consider those NPAs where sector-specific reforms do not work. It was also suggested that the government explore long-term debt market for financing NPAs.

Members also suggested a close monitoring of private-sector asset reconstruction companies (ARCs), which haven’t done well so far, especially in the wake of the government’s decision to allow 100% foreign direct investment in ARCs through the automatic route. Other suggestions include allowing state governments to take part in the auction of stressed assets to fixing the gross NPA norm in the range of 9-10% as well as not counting the asset as an NPA if it has been restructured.


Source : Financial Express

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Merger of SBI, Bharatiya Mahila Bank to herald slew of reforms

The government is expected to initiate reforms in the financial sector soon, starting with merger of Bharatiya Mahila Bank with State Bank of India, India’s largest lender.

Other key decisions that may be unveiled over the next 2-3 months include new capital infusion parameters for 2017-18, a consolidation road map for state-run banks and insurance firms and steps to resolve stressed assets.

“The merger of Bharatiya Mahila Bank may happen within the next few days,” said a senior finance ministry official, adding that consolidation of other state-run banks will be taken forward by bringing in the Banks Board Bureau. “The government is only expected to play a matchmaker. It is for the banks to finally decide and kick-start the process,” the official said. There are six to seven merger combinations on the table.

After being nudged by the government, SBI announced its intent in 2016 to merge its five associate banks and Bharatiya Mahila Bank. The cabinet approved the merger last month and said in a gazette notification that the entire undertakings of these five banks will stand transferred to and vested in SBI from April 1.

On the proposal to merge Bharatiya Mahila Bank with SBI, finance minister Arun Jaitley had then said, “It is under consideration as of now.”

The government is open to sell stakes in IDBI Bank in small tranches, including a possible follow-on offer of shares. “We are providing extended capital support to IDBI. Once it has more control on its bad loan portfolio, we are sure there will be enough interest from investors,” the official said. IDBI Bank’s gross nonperforming assets widened to Rs 35,245 crore, or 15.1% of gross advances, at the end of December from Rs 30,134 crore, or 13.05% of advances, as of September 30.

Separately, the finance ministry is giving final shape to more stringent norms on capital infusion in PSBs. The government budgeted Rs 10,000 crore for supporting banks in this fiscal.

“We have already directed banks to divest non-core assets. Increasingly, capital will only be allocated to performing lenders and laggards will either need to change business strategy or merge to achieve economies of scale,” said another ministry official aware of the developments.

The Banks Board Bureau will work with lenders to develop business strategies and capitalraising plans.

In 2016-17, the government decided to infuse funds early to allow banks to step up lending. It set aside 25% of funds to be disbursed based on performance parameters including more efficiency, growth of credit and deposits and reduction in operation costs.

Jaitley and senior government officials met Reserve Bank Governor Urjit Patel and his two deputy governors last week to take stock of stressed assets in staterun banks and firm up ways for their quicker resolution, which may include the setting up of a bad bank, an asset management company to tackle stressed loans.

The non-performing assets of public sector banks stood at Rs 5,89,502 crore (11.82%) in September, the government said in parliament last month.

Source : Economic Times

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SBI to hike stake in credit card JVs to 74 per cent

State Bank of India on Tuesday said it will hike its stake in its two credit card joint ventures with General Electric Company to 74 per cent.

SBI's board has given approval to infuse Rs 1,160 crore in the two JVs -- SBI Cards and Payment Services Pvt Ltd (SBICPSL) and GE Capital Business Processes Management Services Ltd (GECBPMSL)-- through purchase of equity shares from GE Capital so as to increase the bank's stake in both the companies to 74 per cent, SBI said in a filing to the BSE.

The American company seeks to exit SBI Cards.

SBI currently holds 60 per cent stake in SBICPSL and 40 per cent in GECBPMSL. The balance being held by GE Capital in both the ventures.

As per an agreement between SBI and GE Capital at the time of formation of SBI Cards, it was decided that whenever any party decides to exit the JV, the decision has to be on the basis of mutual understanding.

SBI, the nation's largest lender, entered credit card business in 1998 by roping GE Capital India, the consumer finance arm of US-based GE Capital.

Currently, SBI Cards' board has eight members, including three from GE Capital.



Source : Economic Times

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SBI launches 'Work from Home' facility for employees

Country's largest lender State Bank of India today launched a new facility to enable its employees to work from home.

The Board of the bank has recently approved the 'Work from Home' policy to enable its employees to work while at home using mobile devices to address any urgent requirement they may have, that prevents their travelling to work.

The lender will be using mobile computing technologies and shall have continuous control over all the enabled devices centrally to manage and secure the data and applications on the mobile devices, the bank said in a statement here today.

The use of technology and services shall be monitored through carefully designed MIS and dashboard to enable improvements and refinements, it said.

The bank said going forward cross-sell, marketing, CRM, social media management, settlement & reconciliation, complaints management applications will also be enabled to make the work from home services comprehensive and increase the employee productivity multi-fold.


Source : Economic Times

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