Govt launches education loan portals

The government has launched ‘Vidya Lakshmi’, a web-based portal for students seeking educational loans.

“The portal provides a single window for students to access information and make applications for loans provided by banks as well as government scholarships,” a statement from the Finance Ministry said on Thursday. So far, 13 banks have registered 22 educational loan schemes on the portal and five banks — SBI, IDBI Bank, Bank of India, Canara Bank and Union Bank of India — have integrated their systems with the portal for providing loan processing status to students, it added.

The portal has been developed and is being maintained by NSDL e-Governance Infrastructure.


Source : Thehindubusinessline

Website address is www.vidyalakshmi.co.in

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SBI chief pitches for re-introduction of 'teaser' home loans

State Bank of India Chairman Arundhati Bhattacharya on Thursday made a strong pitch for re-introduction of the so-called ‘teaser’ home loans so that demand, especially in urban India, kicks in and the economy can be set on the recovery path.

In 2008, when the economy started faltering in the wake of the global financial crisis, India’s largest bank had introduced home loans whereby the interest rate in the first two years was low (at 8 per cent) and the rate from the third year onwards would be at the prevailing market rates.

Teaser home loans

Rivals tagged SBI's 'Happy Home Loan and Easy and Advantage Home Loan' loan as ‘teaser’ and criticised SBI. Both these loans held the interest rates fixed and below the market rate in the initial years. Thereafter, the rates turn floating.

However, fearing loss in market share, SBI's rivals quickly introduced it. Then the scheme was also criticised as existing home loan customers did not get the benefit of soft interest rates.

“In 2008, when the economy started faltering, one of the things that really made the demand work was the 8 per cent housing loan that SBI gave. Of course, at that point of time it was tagged as ‘teaser’ loan.

“We, in SBI, refute that because the due diligence that went into giving those loans was the same as would have been for a regular loan. Even the eligibility was like the regular loan,” said Bhattacharya in a Tete-a-Tete session with RBI Governor at the bank’s conclave.

Pick-up in demand

She underscored that demand really kicked in with the introduction of the home loan and three years later Kausik Basu, who was the Chief Economic Adviser to the Government, acknowledged this in the Economic Survey saying that this was one of the tipping points.

“Now today the base rate is at 9.70 per cent… I was just thinking is it possible that for a little while something of this kind can be allowed given the fact that this is one of the loan portfolios where the NPA (non-performing assets) is the lowest,” said Bhattacharya.

The NPA in bank’s home loan portfolio in the Rs. 30 lakh and above bracket is only 0.29 per cent.

Realty market

“So, there has been no bubble built up over here. And, maybe, we could also ask the realty players to bring down their rates also equally. This is something that can be used as a kicker for getting the retail demand started,” said the SBI chief.

In response to Bhattacharya’s request, Raghuram Rajan, RBI Governor, said: “Well, I never say no to your ideas. We will examine them.”

“I do also believe that if real estate developers, who are sitting on unsold stock, started bringing down prices that would be a very big help to the sector because once there is a sense that the price itself has stabilised then more people will be willing to buy….,” said Rajan.

The Governor said: The real estate market needs to clear and with growing unsold stock we need to figure out ways to do it. Some of it may be by making loans easier. But the RBI also don’t want to create a situation where prices stay high and the demand does not pick up.''

Buttressing the stand of the country's biggest lender on teaser home loans, the Economic Survey of 2010-11 said the fact that the scheme enabled many new home buyers to enter the market speaks well of the inclusiveness of the scheme even as the sub-prime segment was deliberately left out.

The Survey said the ‘teaser loans' terminology is sufficiently tainted for a neutral term to be of some value. It referred to such loans as ‘terraced loans' i.e. loans in which the monthly repayment of instalment rises over time.


Source : Thehindubusinessline

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Payments bank segment: ICICI Bank to adopt wait and watch approach

ICICI Bank, country's largest private bank, will watch the progress before venturing into the payments bank segment. The bank already has a tie-up with payments bank licence winners Fino Paytech and Vodafone m-pesa.

"We'll watch the progress in both and will continue to move forward, we've with Fino and Vodafone.

"The entry of new players will only enhance the financial eco-system and make the existing banks more tech-savvy," said Chanda Kochhar, MD and CEO of ICICI Bank, on the sidelines of an SBI event.

Echoing the RBI Governor's views, Kochhar said payments banks will only be complementary to whatever else the rest of the banking system is doing.

On stalled projects, the ICICI Bank chief said, "We need to clear existing projects....FDI investors look at sectoral solutions. We're looking at plug and play solutions. Those make projects very bankable."

She said the bank's digital product ‘Pockets’, (its mobile app) was already its digital bank and had 1 million downloads already.

Talking about interest rates, Kochhar said as monetary policy rates come down, FD (fixed deposit) rates get reduced.

"But FDs are only 60 per cent of the deposit base. A 75 bps cut translates into 40-45 bps cut in cost of funds for banks. You have already seen a 30 bps cut," she said.

Transmission will never have a one-is-to-one correlation with monetary policy rates. Deposit rates will depend on other products such as small savings, where interest rates are high; deposit rates will have to be in line with those, Kochhar explained.


Source : Thehindubusinessline

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RBI to announce small finance bank licences next month

After granting approval to 11 entities for payments banks on Wednesday, RBI Governor Raghuram Rajan today said that the central bank will announce small finance bank licences next month.

Rajan said such banks could be a path of migration to universal banks.

In February this year, about 72 entities and individuals had applied for small finance banks.

Those which have applied for small finance banks include housing finance firm DHFL, IIFL Holdings, Lulu Forex, SKS Microfinance, UAE Exchange and Ujjivan Financial.

Small finance banks can provide basic banking services like accepting deposits and lending to the unbanked sections such as small farmers, micro business enterprises, micro and small industries and unorganised sector entities.

On payments banks, Rajan said that they would not pose any competitive threat to the existing banks and these new entities would rather serve as 'feeder' for the universal banks.


Source : Thehindubusinessline

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All major bank unions to join September 2 strike

All the leading unions across the banking sector will join in the pan-India bank strike on September 2, said CH Venkatachalam, General Secretary, All-India Bank Employees’ Association.

The strike is to protest against the ‘anti-labour and anti-people policies’ of the Centre and in support of the call given by the Central trade unions.

“There are open attempts to amend the various labour laws in favour of the employers and to the detriment of the workers,” he said in a statement. “The neo-liberal economic policies are aggravating the problems of the workers and common masses.”

The labour-law changes were to empower the employers with unfettered ‘hire and fire’ rights and to strip the employees and their unions of their rights.

Venkatachalam alleged that there were continuous attempts at privatisation of banks as well as for consolidation and merger of banks. More and more private capital and FDI were being encouraged. Regional rural banks are sought to be privatised, and urban co-operative banks are under threat of de-licensing.

Several government schemes were being passed on to public sector banks without giving them proper infrastructure and manpower, causing harassment to the bank staff.

Venkatachalam said members of the All-India Bank Officers’ Association, Bank Employees Federation of India, Indian National Bank Officers’ Congress, National Organisation of Bank Workers, Indian National Bank Employees’ Federation, National Organisation of Bank Officers, All-India Co-Operative Bank Employees’ Federation, All-India Gramin Bank Employees’ Association, All-India Gramin Bank Officers’ Association, All-India RRB Employees Association, All-India Reserve Bank Employees’ Association and All-India Reserve Bank Workers’ Federation would go on strike on September 2.


Source : Thehindubusinessline

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