Monday, May 07, 2012
Gulf News
Dubai Indian non-residents who took out State Bank of India (SBI) housing loans back home are not going to see a fall in interest rate anytime soon after the Reserve Bank of India cut the repo rate by 50 basis points last month, according to A. Krishna Kumar, managing director of India’s largest bank.
Repo is the rate of interest banks pay to borrow money from India’s central bank.
“Right now, we are pretty low rate in any case,” Kumar said. “At the lowest end we have 10.5 per cent right now, and the card rate I think is 10.75 per cent. We have a discount offer going on for the last few months of 25 basis points. We are not looking at the housing loan interest rate at the present moment. Let’s see how it goes in the next couple of months.”
The bank has, however, gone ahead and reduced rates in the auto and educational loan segments as well as cut the lower end of small and medium enterprises.
In an interview with Gulf News during a visit to Dubai at the end of April, the senior official, who is one of the three managing directors of SBI, said the bank was expecting to achieve growth of 25 per cent in deposits and about 20 to 22 per cent in credit in the coming year.
In the year ending March 31, the initial figures show a deposit growth of about 18 per cent and credit growth of around 15 per cent. In the retail segment, deposit growth has been “pretty robust,” up more than 20 per cent.
The challenge still remains in the loan segment which, according to Kumar, is on the “high side.”
“We have had a pretty difficult time in terms of bad loans. As of December 2011, the nonperforming loan ratio was in excess of 4 to 4.2 per cent of the total loans.”
He believes that plateaued in the quarter ending March, but “we have to wait for the audited results to come out before we can [come] out with any definitive statement.”
As for international operations plans, the bank is looking to expand its footprint in the rest of the globe, especially where the Indian diaspora is present.
In December the bank opened a branch in the Qatar International Financial Centre as well as in Jeddah in Saudi Arabia, where it is offering personal banking services.
The bank’s DIFC (Dubai International Financial Centre) branch was launched in September 2009.
But it’s in Singapore and the UK that Kumar said they had several branches, including ATMs.
“Also, we are looking at going into those areas where there is a lot of India-related trade business like in South Africa we recently opened another branch just last month. We are looking at Australia as well.”
The bank has both retail and wholesale business in international operations. The wholesale business especially comes from London, New York, Singapore, Hong Kong and Tokyo.
“We are concentrating on both businesses. And I think we are looking at, initially at least, the next two to three years trying to see that our international operations give about one-fifth of our profits,” Kumar said. Currently, it’s between 12 and 15 per cent.
This year, the bank will recruit about 9,000-10,000 clerical staff, and another 2,000-3,000 officers. In fact one of the challenges in the coming three to four years is to fill senior and top level positions that will be vacated after the retirement of 60 to 70 per cent of those officials.
“That is the concern,” said Kumar.
“That is why we need to recruit the people and have some sort of quick promotional opportunities within the organisation; so when the 60 per cent of the people retire at the top level there are people coming up from the organisation to take over. That is the area we are addressing now.”
year ahead
banking in india
25%
Expected growth of SBI in deposits this year
10,000
people to be recruited by SBI this year
By Gaurav Ghose?Financial Features Editor
Gulf News 2012. All rights reserved.
