SBI hints at more cuts in lending rate

Given that SBI has already reduced the base rate, another round of rate cut may be difficult but the bank may go for reducing rates and thereby cutting spreads in select loan categories

Mumbai: State Bank of India (SBI) has said though there is little room for further reduction in the base rate, it could cut lending rates in select categories, as it recently did for the small and medium enterprises (SMEs), home and auto loans, reports PTI.


Given that the bank has already reduced the base rate, another round of rate cut may be difficult but the bank may go for reducing rates and thereby cutting spreads in select loan categories, SBI Chairman Pratip Chaudhuri told reporters in Mumbai.


The bank had slashed its base rate by 0.25% to 9.75% last Tuesday in a bid to transmit the benefit of the 0.25% reduction in the cash reserve ratio by the Reserve Bank of India (RBI).


Chaudhuri said with the reduction in base rate, the bank was leading the path of interest rate reduction in the system, in sync with the wishes of the central bank.


The bank, which had also reduced its deposit rates in some specific tenors in the recent past due to subdued credit growth, currently has an excess liquidity of over Rs70,000 crore, including Rs50,000 crore in SLR bonds.


Chaudhuri also said despite muted credit growth, the bank is hopeful of meeting its credit growth target of 18-20% on the back of recent reduction in the base rate.


According to Chaudhuri, credit growth is up 14.5% as of now, while deposits are clipping at 16%. The bank also aims at 20-25% growth in auto and home loan in the current fiscal on the back of recent rate reduction in these segments.


Referring to net interest margin (NIM), he said that NIM for domestic business till 31st August was 3.94%.


Diwakar Gupta, chief financial officer and managing director of SBI said that the overall NIM target (domestic plus international) for first half of the year is 3.6% and pointed out that net interest income was better in August against July.


The bank also informed that asset quality in the second quarter was marginally better than the previous quarter.


Referring to the forthcoming restructuring of state electricity boards (SEBs), Chaudhuri said it will not have any significant impact on the bank as its total exposure to SEBs is only Rs400 crore.


The Cabinet is set to clear a Rs1.2 lakh crore loan recast of 25 SEBs which will also involve a tariff hike by the discoms, which are sitting on a Rs2 lakh crore debt.


The bank along with the associates would require Rs1-1.25 lakh crore in capital for Basel III implementation between 2015 and 2018, taking into account credit growth of 20%, Gupta said, adding the bank has many options including a qualified institutional placement to raise the required capital.


The bank also informed that there is no plan to merge any of the subsidiaries till tier-I capital of the parent bank increases as SBI would require capital of Rs2,000 crore for each merger.


SEBI imposes fine on CA firm owner in BoR matter

SEBI had summoned Mehta, the CA, to examine his link to Sangeeta Jayram Sawant, director of 30 companies that were connected to the promoters which were buying and selling shares of BoR, but he did not comply with the order

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) imposed a penalty of Rs6 lakh on Dilip S Mehta, owner of a chartered accountancy firm, for failing to respond to summons issued by it in relation to a probe into the affairs of erstwhile Bank of Rajasthan (BoR), reports PTI.


The matter pertains to alleged irregularities committed by former promoters of Bank of Rajasthan (BoR).


Imposing a "penalty of Rs6 lakh", SEBI in its order said Mehta's failure indicates that the default is repetitive in nature.


SEBI had summoned Mehta to examine his link to Sangeeta Jayram Sawant, director of 30 companies that were connected to the promoters which were buying and selling shares of BoR.


It had issued two summons to Mehta. Both were received by him but did not comply with them.


The market regulator observed that the information sought from Mehta was critical and imperative to the investigation and failure on his part to comply with the summons had hampered the probe.


SEBI noted that the "information provided by the noticee now is of no relevance and cannot be accepted as the same was required by the Investigating Authority before the completion of the investigation. Hence the submissions made by the noticee are not accepted".


The matter relates to SEBI's investigation into the affairs of BoR for a period between June 2007 and December 2009. Since then, BoR has been acquired by ICICI Bank.


The probe revealed that BoR's then promoters, led by Pravin Kumar Tayal, along with some companies that were connected to him and his relatives, by way of their continuous disclosure publicly announced that their stake had come down from 44.2% as on quarter ending June 2007 to 28.6% as on quarter ending December 2009.


However, it was alleged, though as per disclosure their holding seemed to have reduced, but in reality the holding of the promoters actually increased with the active collusion of front entities.


Thus, the shareholding of the promoters of BoR with person acting in concert (PACs) had increased from 46.8% in June 2007 to 63.15% in December 2009.



nagesh kini

4 years ago

The Market Regulator, SEBI has necessarily to move the Accounting Regulator, the ICAI to initiate appropriate action under its disciplinary jurisdisction to convey the message that such acts will not be tolerated. Mere penal penalties won't do.


Vaibhav Dhoka

In Reply to nagesh kini 4 years ago

None of regulatory authorities usually take action may be Medical council for Doctors or Bar Council for advocated.These authorities have been established by Act of Parliament and they are supposed to be alert for malpractces in thier proffession ,but all in slumber sleep with with rarest of rare action by them.

nagesh kini

In Reply to Vaibhav Dhoka 4 years ago

All regulators are tooth less, rather than being watch dogs they neither bark nor bite. They are a pain!

Fire, group health, motor insurance premiums may go up

Insurance lines, which are making some kind of losses, will see some hike in premium rates says a top official from United India Insurance

Mumbai: Premiums in various segments like fire, group health insurance plan and third-party motor insurance are likely to go up in the wake of losses being incurred by insurers, reports PTI quoting a top executive from United India Insurance.


"There are certain lines of business like fire insurance, group health insurance and motor third party insurance where premium rates will go up. Insurance lines, which are making some kind of losses will see some hike in premium rates," G Srinivasan, Chairman-cum-Managing Director of United India Insurance told reporters.


He, however, said the extent of hike would be consumer specific than across the board.


Reacting to proposed rise of foreign direct investment (FDI) cap in insurance sector, Srinivasan said it would help in bringing more capital into the insurance industry.


He informed that the company was comfortable with recent guidelines for initial public offerings (IPOs) released for non-life insurers.


"We are quite comfortable with the guidelines (for IPO). We have profits in last five years," he said, adding the government will take the call on listing of the public sector general insurer.


About product launch, Srinivasan said the company is putting emphasis on upcoming new products in retail segment.


"We have sought IRDA's approval for one health insurance product recently," he said.


On the third party motor insurance where insurers are incurring losses, Srinivasan said a hike in the premium, especially in commercial vehicle segment, is necessary.


"Pricing in the motor third party, especially for commercial vehicle, needs to be increased by 30-40%," he said.


United India Insurance posted a 21% rise in net profit at Rs192 crore in the first quarter of FY13 against Rs159 crore in the same period last fiscal.


The premium income has grown by 20% to Rs2,428 crore from Rs2,022 crore in the year ago-period against the industry growth rate of 18%.


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