SBI raises benchmark lending rate by 50 basis points

New Delhi: State Bank of India (SBI), the country's largest lender, today raised benchmark lending rate (BPLR) by 50 basis points (bps) to 12.25%, making home, vehicle and other corporate loans linked with the rate costlier to existing borrowers, reports PTI.

However, for new borrowers the base rate, which became effective from 1st July this year, stands at 7.5%.

The state-run lender also increased its fixed deposit rates by up to 150 basis points across various maturities.

The decision comes days after the Reserve Bank of India (RBI) increased its key rates to control rising prices.

"The bank has revised the benchmark prime lending rate upwards by 50 basis points from 11.75% per annum to 12.25% per annum effective from 17th August," SBI said a filing to the Bombay Stock Exchange (BSE).
As far as revision in fixed deposit rates is concerned, SBI increased interest rate by 1.5% to 4% per annum for the term deposit with maturity between 15 to 45 days. This is the highest increase done by the bank among various maturity term deposits.

For fixed deposit between 181 days to less than one year the new interest rate will be 6% against existing 5.25%, while 555 days fixed deposit rate will attract interest rate of 7.25% an increase of 1.25%.

The term deposit rate between three years to five years will go up by 75 bps to 7.25% from tomorrow, while five years to eight years maturity slab is increased by 25 bps to 7.50%.

Meanwhile the bank also announced launch of floating fixed deposit product linked with base rate with effect from 6 September, 2010.

"The bank announced launching of floating rate term deposit products linked to 'Base Rate' effective from September 6, 2010," SBI said in the filing.

Base rate is the lowest lending rate below which the bank cannot give loan to any customer.

For one year floating fixed deposit the interest rate will be 50 basis points (bps) lower than the existing base rate which is currently at 7.5%, it added.

For three years (floating) term deposit the interest rate will be 25 bps lower than the base rate. While for the five years floating fixed deposit the interest rate will be at base rate.

The RBI, in its monetary review last month, raised the short-term borrowing (reverse repo) rate by 50 basis points and lending (repo) rate by 25 basis points to tame inflation.

Following the monetary action, most of the public sector lenders, including Punjab National Bank, Bank of Baroda, Bank of India, Oriental Bank of Commerce and Canara Bank, responded by hiking their BPLRs by up to 50 basis points. At the same time, many banks have increased deposit rates.


Moneylife Foundation conducts workshop in Pune

As the first step towards carrying the torch of financial literacy to the rest of the country, Moneylife Foundation held an interactive seminar in Pune on Saturday

Pune, 14 August, 2010: Moneylife Foundation has taken significant strides forward since its launch in February this year. Within a period of just six months, the foundation has received an overwhelming response from the public, with more than 2,700 members already registered. However, much more needs to be done, especially in the light of the dismal health of the retail investor population in India.

Notwithstanding the government's claims to the contrary, India's investor population has fallen to 80 lakh from 2 crore over the past two years. According to CMIE, even mutual fund investment is restricted to just 20 lakh households. This only drives us in our efforts to spread further the message of financial literacy and awareness. We are looking to enrol 10,000 members by the end of this fiscal year in our bid to spread advocacy for the masses.

As the first step towards carrying this torch of financial literacy to the rest of the country, Moneylife Foundation on Saturday held an interactive seminar in Pune.Mr Debashis Basu, Editor of Moneylife and Ms Sucheta Dalal, Managing Editor of Moneylife held an interactive working session on finance titled 'How to be safe and smart with money'. Ms Dalal spoke on how to avoid losses by staying away from certain kinds of investments like chain marketing and pyramid schemes. She explained how these scamsters operate and advised investors to stay away from such frauds.

She also spoke about the implications of credit card transactions and the implications of default and its impact on an individual's credit history and ability to borrow. Mr Basu told people that investment does not have to be difficult and complicated if one was clear about the basic objectives, avoided obvious pitfalls and followed a sensible and consistent investment policy. "Many a times, investors are lured by fast and big returns and opt out for short-term investment. To avoid such risks, investors should think about the long term and fix goals accordingly," said Mr Basu. He showed how one could keep things simple, avoid complications and make steady returns without becoming an expert on markets.

This workshop was followed by another interesting seminar organised with the help of Karvy Mutual Fund Services and Computer Age Management Services (CAMS), India's top two registrar & transfer agents (RTAs). The two have got together to develop and offer some amazing online free tools that permit investors to access details of their mutual fund holdings and to track their entire portfolio.

Moneylife Foundation, along with Axis Mutual Fund, introduced these tools through presentations by senior executives of CAMS & Karvy.  

As Prabal Nag, Vice President (business development) at CAMS, pointed out, the two RTAs have gone well beyond what is required of them in terms of facilitating and making the entire process of investing a more pleasant and easy experience. He urged investors to take advantage of the website services. These easy-to-use tools only require investors to register their email address with each mutual fund folio, which in turn, helps them access their account by creating a one-time password. Once in, an investor can get a consolidated view of his/her mutual fund investments, across different funds, fund houses or distributors, with information about returns, dividends, switches, etc; and generate transaction statements and update information across folios through a PAN-based service.

Apart from demonstrating the online tools, executives of CAMS and KARVY gave the audience some useful tips on how to ensure that the entire process is smooth and easy. They also mentioned the dos and don'ts to keep in mind while investing in mutual funds.

Anand Varadarajan, Head, Business Development of Karvy for Investor Relations Business spoke at length about the automation brought in by RTAs and its relevance for the investors.

Manesh Thakur (Vice President & Zonal Manager - West & East) Axis Mutual Fund, spoke about various issues facing the industry at large.

Investor feedback on the tools demonstrated was extremely positive; they said it freed them from the drudgery of tracking various account statements and calling mutual fund help-lines to inquire about statements from one of the 35-odd asset management companies. Now you can get all the information you want at the click of a button, 24x7. "You can actually get a combined account statement of all your investments across all funds served by the three R&TAs - Karvy, CAMS and Franklin Templeton," pointed out Mr Nag. Malati Majumdar, General Manager-Customer Relations at CAMS, made a detailed presentation of the various tools offered by the registrar through a live demonstration.  



Angelo Extross

7 years ago

MoneyLife Foundation had done yeomen service to the Punekars. Most important the seminar only only showed how to spot a con, but how to avoid being duped. We, as consumers, must expand our knowledge and command more power in the market-place. Being ripped off is not only a financial loss - its an assault on your spirit, a challenge to your self-esteem.
We should adopt the motto, "Buy, don't be sold" - but for that we require the knowledge, skills and finally the confidence to do so. I look forward to Moneylife Foundation to lead us in this direction.

Ravi Chhabra

7 years ago

Nice event and organized very well . the team work was excellent. Proved to be informative also.Should have more of such events in future also, but suggest more interaction between audience and the speakers
ravi chhabra


7 years ago

Excellant, Marvollous,Mindrefreshing event educative to a new Investor.
can I get a copy of the event organised at pune a CD or a video coverage through my email.
Praveen Kondal

Shrinivas Madwanna

7 years ago

I was in Pune to attend the workshop, It was very usefull. and helpfull. I pointed out to Karvy the difficulties where Karvy branch is not present. They ask only for D.Ds for the first payment.and rest PDCs.They do not accept local cheques of nationalise banks. Ecs is not accepted. Karvy must change the system.
Moneylife must arrange such meets from time to time.

Sudhakar Kulkarni

7 years ago

I am please to inform you that Pune seminar (held on 14/08/2010) was grand sucess and such type seminars at various loations is the need of the our, since awareness about the financial literacy needs lot of attention and efforts at all levels,I as Certified Financial Planner would like assist in your efforts in this direction .
Thanks and regards,

Sachin Patil

7 years ago

What is moneylife foundation? How do I register for it? I discovered about this foundation thorugh P. V. Subramanyam's blog. Can you tell me about it?

Weekly Closing Report: The bear hug is likely to tighten

The market started the week with modest gains despite a high degree of volatility. Selling pressure ahead of the US Federal Open Market Committee (FOMC) meeting resulted in a flat closing for the domestic market with a negative bias on Tuesday. Assertion by the Federal Reserve that it would take more steps to boost the sagging American economy did not go well with investors and indices ended in negative terrain. The market witnessed lacklustre trading for the remaining two days of the week. For the week ended 13th August, the Sensex and the Nifty settled flat with a positive bias, up 23 and 12 points respectively.

The top Sensex performers on a weekly basis were Tata Motors (up 14%), State Bank of India (SBI) (up 9%), Jindal Steel & Power (up 6%), DLF (up 5%) and Hindustan Unilever (HUL) (up 4%). The top laggards of the index were Sterlite Industries (down 9%), Wipro (down 4%), Mahindra & Mahindra, Infosys Technologies and Reliance Communications (RCom) (down 3% each).

The top gainers in the sectoral space on the BSE were Realty (up 7%), Consumer Durables (CD) (up 4%) and Bankex (up 3%). The top sectoral losers were IT and TECk (down 2% each) and Healthcare (HC) (down 1%).

Snapping an eight-month trend of double-digit rise, industrial growth slid to 7.1% in June from 8.3% a year ago. The lower growth rate has been attributed to the high base rate effect.

However, despite a single-digit growth in the month, factory output expanded by 11.6% in the first quarter from 3.9% a year ago. Industrial growth figures for May were revised downwards to 11.35% from 11.50% estimated earlier.

The decline in industrial expansion will further increase the Reserve Bank of India's (RBI) dilemma on rate hikes to check inflation, experts said.

After being in single-digits for two weeks, food inflation shot up again to double-digits at 11.40% for the week ended 31st July as prices of cereals, milk and fruit went up.

Food inflation, which was 9.53% for the week ended 24th July, had remained in single-digits for a fortnight before bouncing back. Food inflation, which was over 20% in December 2009, slipped to single-digits in the third week of July.

The overall inflation, which includes change in prices of manufactured goods, was 10.55% during June.

Domestic passenger car sales jumped by 37.95% to 1,58,764 units in July compared to 1,15,084 units in the same month last year. According to the figures released by the Society of Indian Automobile Manufacturers (SIAM), motorcycle sales in the country grew by 30.09% to 7,10,621 units during the month under review from 5,46,233 units in the same month last year. Total two-wheeler sales in July increased 30.41% to 9,38,514 units from 7,19,656 units in July 2009.

Total sales of vehicles across categories registered a growth of 31.50% to 12,37,461 units in July against 9,41,070 units in the same month last year, the industry body added.

The FOMC on Tuesday said that it would take more steps to boost the sagging US economy. Besides, the Fed left the overnight interbank lending rate target in a range of zero to 0.25%, where it has been since December 2008, and repeated a pledge to keep rates low "for an extended period."

The Reserve Bank of India (RBI) has brought out a discussion paper on giving out new banking licenses to business houses and non-banking financial companies (NBFCs), and regulations for the same to foster greater competition.

The central bank also sought to know "whether industrial and business houses could be allowed to promote banks." It also posed the question whether NBFCs should be allowed to convert into or promote banks. The central bank sought feedback on these issues along with the business model for new banks by 30th September.

Currently, India has 27 public sector banks, seven new private sector banks, 15 old private sector banks, 31 foreign banks, 86 regional rural banks, four local area banks, 1,721 urban co-operative banks, 31 state cooperative banks, and 371 district central co-operative banks.

On the corporate front, Scottish oil explorer Cairn Energy Plc said that it is in talks to sell part of its stake in its Indian unit, Cairn India, which owns the massive Rajasthan oilfields. Though Cairn Energy did not identify the suitor, speculation is rife that it could be India-focused miner Vedanta Resources Plc.

Indian auto and farm equipment major Mahindra & Mahindra (M&M) has been selected as a preferred bidder for South Korea's Ssangyong Motor Company (SMC) in a deal valued at up to $500 million. The preferred bidder status would require M&M to enter into a memorandum of understanding (MoU) with SMC, followed by a detailed due diligence process.

M&M said it would sign the MoU with Ssangyong in the next two weeks, followed by due diligence in September and a definitive agreement by November. The bid price is to be announced when the MoU is signed.


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