Tag: sbi

Bad bank may be led by private lenders for greater flexibility, BFSI News, ET BFSI

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Private sector banks and entities are being tipped for taking 51% stake in the proposed bad bank with public sector lenders taking the rest, according to reports.

However, the lenders with links with bad assets housed in the bad bank will not be allowed to invest in it.

How will a private sector-led bad bank help?

With the majority ownership vested in the private sector, it would lead to flexibility in decision making.

The chief economic advisor had pitched for a private sector-led bad bank earlier.

“The bad bank will certainly help in consolidating some of the non-performing assets. It’s important to also think about implementing the bad bank in the private sector that enables (faster) decision making,” he had said.

The move would keep the organisation out of the purview of government scrutiny of Central Central Bureau of Investigation (CBI), Comptroller and Auditor General of India (CAG), Central Vigilance Commission (CVC).

How does the private sector benefit?

There are about Rs 2 lakh crore of toxic assets that can come under the bad bank which the private sector can manage for fees.

The current plan

Nine banks including the State Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda (BoB) and two non-bank lenders are likely to put in Rs 7,000 crore jointly as initial capital in the proposed bad bank that aims to help extract funds stuck in non-performing loans.

Canara Bank, Union Bank of India and Bank of India will join their larger state-run peers as investors in the bad bank along with two state-run financiers of power projects-Power Finance Corp (PFC) and Rural Electrification Corp (REC). All these 11 entities will own an equal stake in the proposed bad bank with little over 9% equity each.

ICICI Bank, Axis Bank and Life Insurance Corp of India (LIC)-owned IDBI Bank are also among the shareholders.

Assets

Lenders have identified about Rs 2 lakh crore of bad loans for which they expect Rs 40,000-50,000 crore. These assets will be transferred to the new ARC at 15% upfront cash, about the level of capital being infused into the company.



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Home loan rates hit rock bottom, only for those with high credit scores, BFSI News, ET BFSI

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Home loan rates have dropped to a jaw-dropping sub-7% range, last seen 15-20 years back, and are luring buyers to the real estate market.

However, lenders are not offering such low rates to all, but only to the borrowers who have high creditworthiness.

State Bank of India

The SBI announced an interest concession of up to 70 bps with interest rates starting from 6.7% onwards for a limited period till March 31, 2021. The lender is also giving a 100% waiver on processing fees.

However, its interest concession is based on loan amount and CIBIL score of the borrower. SBI believes that it is important to extend better rates to customers who maintain good repayment history. SBI home loan interest rates are linked to CIBIL score and start from 6.7% for loans up to Rs 75 lakh and 6.75% for loans above Rs 75 lakh.

SBI is offering such rates to borrowers who have a CIBIL credit score of above 800, according to reports. At SBI borrowers credit scores of 700-750 will have to shell out a higher rate of 6.9% on home loans, whereas those in the 751-800 band will be eligible for loans at 6.8%.

CIBIL score

According to CIBIL, about 79% of loans sanctioned are for people with 750-plus score. Scores above 800 are considered high and you can easily ask for a lower rate on personal loans and credit cards.

A score of 850 – 900 shows that the borrower has never defaulted even once and is an excellent score.
The credit bureau scores are used to assess the creditworthiness of borrowers and lenders often offer lower interest rates to customers with higher scores.

Home loan rates hit rock bottom, only for those with high credit scoresKotak Mahindra Bank

Kotak Bank also recently announced a 10 basis points (bps) cut in its home loan rates for a limited period, while claiming it to be the lowest in the market. Customers will be able to avail of home loans for 6.65% till March 31 as part of a special offer after the rate reduction. The 6.65% rate is applicable to both home loans and Balance Transfer Loans across amounts. This is a limited period offer ending on 31 March. The lender is also giving a 100% waiver on processing fees.

HDFC

HDFC slashed home loans interest rates by 5 basis points to 6.75%. The changes will be effective from Thursday (4 March). The company reduced its Retail Prime Lending Rate (RPLR) on Housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 5 basis points. The change will benefit all existing HDFC retail home loan customers.

Home loan rates hit rock bottom, only for those with high credit scoresBooming sales

Housing sales rose 25 per cent year-on-year during the October-December period at 1,10,811 units across seven cities on pent up and festive demand, according to data analytic firm PropEquity. Housing sales stood at 88,976 units in the year-ago period.
Showing signs of recovery, total sales of home units in seven cities increased 78 per cent in the fourth quarter of 2020 to 1,10,811 units as against 62,197 units in the third quarter of 2020.



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Morgan Stanley, BFSI News, ET BFSI

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Indian state-owned lenders are expected to see additions to bad loans moderate, but structural issues at the banks could cap returns on their stocks, Morgan Stanley said on Thursday.

Some of the country’s state-owned banks have long struggled with a pile of bad loans, prompting the government to pump in more funds to shore up their balance sheets.

“Over the past few years, state-owned enterprise banks have seen significant capital infusion by the government, lower risk-weighted assets density, higher provisioning and some large recoveries,” the brokerage said in a report, adding that as slippages moderate, fresh additions to bad loans, credit costs will also moderate over the next few years.

The brokerage preferred India’s largest lender State Bank of India, as well as large private banks, expecting them to play a major role in the corporate recovery cycle.

In February, SBI said its asset quality has remained largely stable and the lender revised its credit cost guidance to lower than 2% for the financial year. A return to pre-pandemic levels of retail growth drove the bank’s third-quarter profit well past estimates.

But weak underwriting practices, diminishing loan market and deposits share in the sector will weigh on the stocks of many other public sector banks even as cheap valuations make them look attractive, Morgan Stanley said.

“We think state-owned enterprise banks will continue to lose loan market share given technology changes, strong competition and a weak internal rate of capital generation,” analysts at the brokerage said.

The Nifty public sector bank index was down 0.4% on Thursday. The index has risen nearly 39% so far this year against a drop of about 31% in 2020.



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Extreme weather like floods, droughts, cyclones puts $84 billion of Indian banks debt at risk, BFSI News, ET BFSI

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An increase in extreme weather events such as floods, droughts and cyclones risk souring debt worth more than Rs 6.19 lakh crore ($84 billion) at India’s biggest financial institutions.

That’s according to leading nonprofit environmental disclosure platform CDP. State Bank of India, the country’s largest lender, HDFC Bank, IndusInd Bank and Axis Bank are among the institutions that reported climate risks to CDP in 2020, it said in its annual report released Wednesday.

The banks flagged exposure to environmentally sensitive businesses including cement, coal, oil and power. They also listed the effects of cyclones and floods on loan repayments in farming and related sectors. Lenders accounted for 87 per cent of the total risk, valued at about $97 billion, across 67 top Indian companies that responded to CDP.

“Climate is the biggest risk to businesses in the long run. Financial institutions are beginning to understand it,” said Damandeep Singh, New Delhi-based director of CDP India. “As investors look at funding companies based on environmental, social and governance disclosures, we’ve seen many more companies report climate change risk.”

The potential harm to agriculture echoes concerns raised by India’s central bank about the impact of climate change on farming, a sector that employs more than half of its citizens. At the same time, the world’s third-biggest emitter of greenhouse gases is relying on coal to help drive its post-Covid recovery. The dirtiest fossil fuel could remain its dominant energy source in the coming decades.

CDP, which gathered the data on behalf of 515 investors with $106 trillion in assets, said it received responses from 220 small and large Indian companies.

State Bank of India, which is facing concerns from shareholders and investors over its proposal to help fund the controversial Carmichael coal mine in northern Australia, valued its total climate risk at Rs 3.83 lakh crore. The bank said it may “indirectly face reputational risks, should it be involved in lending to environmentally sensitive projects which may have significant public opposition.” SBI didn’t respond to a request seeking comment.

The second-highest risk was flagged by HDFC Bank, which estimated it had Rs 1.79 laks crore of assets in danger — a 24 per cent increase from 2019. It said its calculations took into account compensation it would have to pay to employees in case of flooding and its exposure to farming, cement, coal, oil and power.

Smaller private banks IndusInd, Axis and Yes reported lowered climate change risk compared to last year at Rs 46,600 crore, Rs 7,500 crore and Rs 2,000 crore respectively, citing more diversified portfolios.

India was second in the Asia Pacific and sixth globally among CDP’s ranking of countries whose companies committed to science-based targets for net-zero carbon emissions, the report showed. More than 50 Indian companies said they are preparing for future policy and regulatory changes by voluntarily committing to cutting their carbon footprint.

Increased investor pressure and stronger disclosure norms are compelling Indian companies to address climate concerns, the CDP report said. Almost all of companies reported board-level oversight of climate-related issues, while some 84 per cent said climate-related risks and opportunities led them to alter plans for products and services.



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SBI launches second iteration of YONO Super Saving Days, BFSI News, ET BFSI

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State Bank of India (SBI) announced the launch of the second iteration of the YONO Super Saving Days, following the first edition which ran between February 4th to 7th, 2021.

The Super Saving Days, which will run between March 4 and 7, will give an exclusive range of discounts and cashback to the users of SBI’s banking and lifestyle platform, YONO.

In a statement, SBI said it had witnessed a ‘significant’ jump in traction during the first edition of YONO Super Saving Days. For the second edition, the lender said its 36 million customers would have access to offers across the Travel, Hospitality, Health, Apparels & Online shopping.

Retailers SBI has partnered with for the three days including Amazon, Apollo 24|7, EaseMyTrip, OYO, and Raymond. Customers can further avail upto 50% of hotel bookings, flight bookings, Apparels and Health Categories, apart from 7.5% unlimited cashback off Amazon.



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Home loans: Banks unleash rate war towards year-end

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Banks have unleashed a rate cut war in the home loan space on the last lap of the current financial year (FY) 2021 to bulk up their retail portfolio.

State Bank of India (SBI) was the first off the blocks, announcing on March 1 around noon that the minimum interest rate at which it will offer home loans will start at 6.70 per cent (against 6.80 per cent earlier) for a limited period — up to March-end 2021.

Late evening, Kotak Mahindra Bank (KMB) went one better, announcing that the lowest interest rate at which it will offer home loan will be 6.65 per cent (up to March-end 2021) against 6.75 per cent earlier.

Also read: Residential realty recovers on consolidation: ICRA

The move to pare home loan interest rate just for a month seems two-fold. Firstly, banks want to grow their topline due to year-end considerations. Secondly, they are probably signalling to prospective borrowers that home loan interest rates have bottomed out (could rise in the new FY) in the context of rising Government Security (G-Sec) yields.

The move by SBI and KMB could trigger a matching response from other lenders as they may not want to lose business to rivals.

“Banks want to increase their topline towards the year end. Normally, in February and March, they will be in campaign mode for promoting their products.

“Along with the home loan, there will be cross-sell of life insurance policy. If you take a car loan, insurance will come along with that,” said V Viswanathan, banking expert.

He said that banks will try to offset the effect of lower interest rate on home loans through cross-sell of life insurance, which is tacked to the loan.

Moreover, sanctioning loans towards the year end will also help banks to do part-disbursal in the first half of next FY, which is typically a lean season, in respect of stage-based release of installments.

“With low interest rates and various income tax exemptions available on home loans, there will be many people who will want to take a home loan,” said Viswanathan.

That interest rates could be headed north could be gauged from the jump in the yield on the benchmark 10-year G-Sec (carrying 5.85 per cent coupon). The yield on this G-Sec has risen about 33 basis points since January-end 2021.

Ravi Prakash Jaiswal, General Manager, Canara Bank, said: “The outlook for home loans is very good. In the wake of the pandemic, work from home has gained ground. People who were earlier advocating rental housing are now going for their own house.

“And people having their own house are going for bigger house. So, they are disposing off/ renting out their smaller house and going for bigger house.”

Canara Bank kick-started a mega retail expo across the country from February 22 to March 16, 2021 to grow its retail loans such as home, vehicle and education loans.

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Hackers are going after SBI users with a scam that offers credit points worth ₹9,870, BFSI News, ET BFSI

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Several users of the State Bank of India (SBI) have been targeted with a phishing scam where hackers have flooded them with suspicious text messages, requesting them to redeem their SBI credit points worth Rs 9,870.

The link associated with the text messages redirects the user to a fake website and on the landing page, the user is asked to submit personal information along with sensitive financial details like card number, expiry date, CVV and Mpin in a ‘State Bank of India Fill Your Details’ form.

According to the investigation by New Delhi-based think tank CyberPeace Foundation along with Autobot Infosec Private Ltd, the website collects data directly without any verification and is registered by a third party instead of having the registrant organisation name of State Bank of India, making it all the more suspicious.

“Moreover, according to SBI, they never communicate with their customers via SMS or emails containing links with regard to the user’s account. Any reputed banking entity also does not use WordPress like CMS technologies on their official website for security reasons,” the foundation said.

The personal information sought on the malicious website is name, registered mobile number, email, email password and date of birth.

After the form is submitted, the user is directed to a “thank you” page.

“The domain name of the website can be traced to India, and the registrant state was found to be Tamil Nadu,” the report mentioned.

According to the report, it was observed that the form takes user inputs without performing basic validation of data type.

For example, the registered mobile number field, which should only accept numerical values also accepts text input. This can also be confirmed from the source code, where the input type for the field is mentioned as ‘text’ instead of ‘number’ or ‘tel’.

“The email password field shows the entered password in clear text instead of keeping the characters hidden. A similar source code observation is noted,” it added.

“The card number field accepts an infinite number of digits instead of only 16 digits, which SBI cards usually have. All these instances of negligence clearly indicate bad coding practice,” the foundation said.

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SBI lowers home loan rates to 6.70%

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State Bank of India (SBI) has lowered the minimum interest rate at which it will offer home loans from 6.80 per cent to 6.70 per cent for a limited period up to March 31, 2021.

India’s largest bank, in a statement, said its home loan interest rates start at 6.70 per cent for loans up to ₹75 lakh and 6.75 per cent for loans in the range of ₹75 lakh to ₹5 crore.

The lender is continuing with 100 per cent waiver on processing fees.

The bank said, overall, it is offering concession of up to 70 basis points based on loan amount and credit score. This also includes concession of 5 basis points each for women borrowers and digital sourcing through the YONO app.

Saloni Narayan, Deputy Managing Director (Retail Business), SBI, said, the reduced interest rates are one of the best in home loans.

Last month, the bank said it expects to double its home loan portfolio in the next five years to ₹10 lakh crore on the back of higher economic growth and growing preference of the new generation to buy a home early.

India’s largest bank took about 10 years to grow its home loan portfolio from ₹89,000 crore in FY11 to touch the ₹5-lakh crore mark now, according to Chairman Dinesh Kumar Khara.

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SBI to contribute ₹11 cr to PM Cares Fund to help fight Covid-19

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State Bank of India (SBI) has decided to contribute ₹11 crore to the PM CARES Fund to support the Government’s Covid-19 vaccination drive.

Dinesh Khara, Chairman, SBI, in a statement, said, “The fight against the pandemic is not yet over, and as a responsible Corporate Citizen, we consider it our duty to support the government’s efforts to vaccinate all.”

Early last year, SBI committed 0.25 per cent of its annual profit to support the fight against Covid-19. Additionally, SBI employees had contributed ₹107 crore to the Fund, said the statement.

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SBI slashes home loan rates to 6.70%, BFSI News, ET BFSI

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India’s largest lender, State Bank of India (SBI) has cut home loan rates by 70 bps to 6.70% for a limited period offer which will be ending on 31st March 2021.

Further the lender is also giving 100% waiver on processing fees. The lender said, ” The interest concession are based on loan amount and CIBIL score of the borrower. SBI believes that it is important to extend better rates to customers who maintain good repayment history.”

SBI Home loan interest rates are linked to CIBIL score and start from 6.70% for loans upto Rs. 75 lakh and 6.75% for loans above Rs. 75 lakhs. Customers can also apply from the ease of their home via YONO App to get additional interest concession of 5 bps. On the eve of International Women’s day, a special 5 bps concession is being made available to the women borrowers.

Saloni Narayan, DMD (Retail Business), SBI said, “Our customers have complete trust in us because of our total transparency. The reduced interest rates are one of the best interest rates in Home Loans anyone can wish for.”

Last month SBI had achieved the mark of Rs 5 trillion in its home loan business and is projecting touching Rs 7 trillion mark by 2024.

Back then, Dinesh Kumar Khara, Chairman at State Bank of India said, “We are the cheapest home loan provider and we have the best quality loan profile with very less NPAs. We hope to continue the same growth.”

Khara added, “We have always treated home loans as a growth driver for the nation and not just as mere transactions. We, at SBI, will continue focusing on enhancing customer delight that will in-turn enable the bank to scale newer heights.”



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