Mr. Pratip Chaudhuri, Chairman, State Bank of India, He took charge from O.P. Bhatt, on 7th April. Prior to that, he was the Deputy Managing Director (DMD) of the International Division of SBI. He joined SBI 37 years back as a probationary officer in 1974. He has held several important positions in SBI, including Chief General Manager of the Chennai Circle. He is also credited with the merger of the State Bank of Saurashtra in 2008, where he was a Director.
State Bank of India (SBI) is the largest state-owned banking and financial services company in India. The Bank provides banking services to the customer. In addition to the banking services, the Bank through their subsidiaries, provides a range of financial services, which include life insurance, merchant banking, mutual funds, credit card, factoring, security trading, pension fund management and primary dealership in the money market. The Bank operates in four business segments, namely Treasury, Corporate/ Wholesale Banking, Retail Banking and Other Banking Business. The Treasury segment includes the investment portfolio and trading in foreign exchange contracts and derivative contracts.
The Corporate/ Wholesale Banking segment comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Management Group. The Retail Banking segment consists of branches in National Banking Group, which primarily includes personal banking activities, including lending activities to corporate customers having banking relations with branches in the National Banking Group. SBI provides a range of banking products through their vast network of branches in India and overseas, including products aimed at NRIs. The Group, with over 16,000 branches, has the largest banking branch network in India. The bank has 156 overseas offices spread over 32 countries. They have branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Johannesburg, London and environs, Los Angeles, Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo.
Yash Ved of IIFL brings you SBI’s latest media interaction, where Mr. Chaudhuri said “The objective of the lending rate cut is to improve demand for assets which in our view could have a positive cascading effect on related industries.”
What was the objective of reducing benchmark lending rate?
SBI has cut its benchmark base rate from 10% to 9.75% with effect from 20th September.
The bank has also cut its lending rates.
SBI has reduced the effective lending rate for most categories of borrowers, particularly, SMEs, Retail clients and Education loans.
The car loan EMI has been further lowered to Rs 1,686 pm.
The present effective rates for home loans are 10% for loans below Rs 30 lacs and 10.15% for loans above Rs30 lacs. We are of the view that lowering of EMIs significantly improves the affordability of homes and other assets.
The objective of the lending rate cut is to improve demand for assets which in our view could have a positive cascading effect on related industries like Steel, Cement and Construction.
There is an urgent need to step up investment demand, which would generate employment, output and taxes.
For SBI, although the rate reduction would amount to lower interest income to the extent of Rs12.50bn per year, we expect to compensate by attracting additional business.
Do you expect cut in CRR?
We do not expect further cut in the Cash Reserve Ratio from the RBI.
What is your NIM?
NIM was robust at 3.94% for the month of August. Our NIM will be better in Q2 FY13 than in Q1 FY12.
Are you planning a QIP?
We may raise Rs 20,000 crore via QIP.
What loan growth do you expect in FY13?
The bank expects loan growth of 18-20% for FY13.
Any fund raising plans?
The bank may not need additional capital till 2015, but after that the SBI group may require capital of Rs1 lakh-1.20 lakh crore.
Any stake sale plans for Kingfisher Airlines?
The second meeting with Kingfisher Airlines will be in the first week of October. The negotiations are going on with the airline’s promoters.
UB Group may unlock cash from other businesses. Kingfisher Airlines has not indicated any plans to sell a stake to any investor as yet.
What is the current liquidity for SBI?
The bank currently has excess liquidity of Rs 70,000-80,000 crore, which includes its holdings of government securities.
What growth do you see in auto and home loan?
The bank might clock 20-22% growth in automobile and home loans.
What is your exposure to real estate?
SBI’s real estate exposure is among the lowest at 3%. But, we are aggressive on the home loan side.