SBI to launch floating rate term deposit product

SBI has decided to launch a floating rate term deposit product with returns linked to base rate.The floating rate term deposit is being launched to correct interest rate mismatches arising from floating rate assets being financed with fixed rate liabilities, said Mr.S.S.Ranjan,DMD,SBI.
The scheme will be introduced from September 6, a 1 year floating rate deposit will earn interest which is 50 basis points below the base rate(7.50%)ie, 7%.A 3 year deposit will fetch a return of 7.25% and a 5 year deposit will carry interest of 7.50% (BL17082010)

Banks meet on cards for base rate consensus

To put a lid on the guessing game by the banks on each other's base rate , the country's top bankers will meet soon -at the behest of SBI- to discuss the new loan pricing mechanism. The meeting would precede SBI's base rate announcement on June 15,a fortnight before its roll out ,the SBI Chairman said. Most banks are yet to decide about their base rate and the parameters to be taken into account for calculating the new benchmark. A key parameter is the cost of funds, which can cause a huge variance across banks. For example, if a bank takes overnight cost of funds ,which is very low,its base rate will also be significantly lower from a bank,which, for example, takes one-year average cost of funds into account.
Last year,a committee constituted by RBI, reviewed the present system of benchmark prime lending rate and decided to replace it with a base rate.The base rate will be computed after taking into account all costs,including the cost of deposits, the negative carry on CRR and SLR,overheads and employee expenses.Banks cannot lend to any category of borrowers below the base rate.(BS 27052010)

Edelweiss keen on banking foray,awaits RBI norms

Mumbai-based financial services firm Edelweiss is eyeing a banking foray,according to investment bankers. It will be joining the growing list of corporates,including Anil Ambani-promoted Reliance group, Aditya Birla group, Shriram Capital and Religare, which have already made known their intentions to seek a banking licence. Most of the players are waiting for the Reserve Bank of India (RBI) to come out with a fresh set of guidelines that would allow new private players in the banking sector after which they are expected to approach RBI for a banking licence.(ET 27052010)

PNB ties up with OICL

Punjab National Bank has tied up with Oriental Insurance Company Limited to offer a floater Health Insurance Policy covering the proposer and family under one sum insured.The product was launched by the Circle Head,PNB,Ernakulam at Kochi.The scheme is applicable to all PNB customers and employees.Under this,the beneficiary and family members(comprising the spouse and two children)will be covered in one policy and one sum assured.The sum insured floats for all the beneficiaries under the policy.The policy covers beneficiaries between the ages of 3 months and 80 years. (BL 26052010)

SBI to lend Rs20,000 Cr for 3G funding

State Bank of India (SBI) will be lending Rs 20,000 crore for telecom companies to pay for licences for the Third Generation(3G) mobile services. The rate of interest will be decided in one-to-one talks with the operators to whom SBI will be lending, said bank's chairman .The 3G funding would impact the liquidity of the bank in a big way. The SBI chairman said that as on March 31,2010,the bank had Rs40,000 crore liquidity,about 50% of which would go for 3G funding.On the business focus ,the chairman further said that the first focus of the bank would be in retail- home loans and auto loans in particular-followed by the corporate sector. The bank is expecting a 20% credit growth in 2010. (BL 23052010)

For banks,green is the new black

India's leading banks are seizing opportunities in an emerging low-carbon economy.Last December IndusInd Bank inaugurated Mumbai's first solar-powered ATM as part of its 'Green Office Project' campaign titled 'Hum aur Hariyali'. State Bank of India,as part of its green banking policy ,plans to set up captive windmills to generate 15 Mw of power in Tamil Nadu, Maharashtra and Gujarat.A new study by PricewaterhouseCoopers(PwC) commissioned by the Indian Bank's Association(IBA) and The Climate Group confirms that India's leading banks are recognising and seizing opportunities in an emerging low-carbon economy. For instance, in coal technologies, ICICI Bank introduced innovative concepts like deep benefication of coal(coal washeries) and coal bed methane. It is seen that public sector banks are less involved in voluntary initiatives and appear to be postponing action until regulation is in place. However, as an exception, The new Green Home Loan Scheme from SBI will support environmentally -friendly residential projects and offer various concessions.These loans will be sanctioned for projects rated by the Indian Green Building Council (IGBC) and offer several financial benefits-- a 5% concession in margin,0.25%concession in interest rate and processing fee waiver.(BS 22052010)

NHB bullish on reverse mortgage loans

With its new reverse mortgage loan-enabled annuity scheme(RMLeA)offering senior citizens assured lifetime payments instead of the earlier cap of 20 years,National Housing Bank(NHB) is expecting more takers for the product.It is in talks with banks and insurance companies to expand its pool of RML facilitators. While the concept of RMLeA itself has been a slow starter in India,NHB feels the new offering is more attractive to borrowers in terms of higher payments and better risk mitigation.NHB,which is the principal agency to promote housing finance institutions,launched the scheme in India in 2007. Reverse mortgage seeks to monetise the owner's equity in the house. This involves senior citizen borrowers mortgaging their house to a lender ,who then makes periodic payments to the borrower during the latter's lifetime. The borrower need not repay the principal and interest to the lender during their lifetime. On the borrower's death or on borrower leaving the house permanently,the loan along with accumulated interest is settled through sale of the house.The borrower's heir can also repay or pre-pay the loan with interest and release the mortgage without sale of property.Around 23 banks took up the RML scheme which include State Bank of India,Punjab National Bank, Bank of India and Indian Bank.According to NHB, as of March 31,2010,around 7000RMLs of Rs 1400 crore have been sanctioned. (BS 22052010)