New products in loan segment unveiled
Mumbai : In order to kick start the lending process, country’s largest lender State Bank of India introduced a slew of products like Bridge Loan and Instant home top-up loan on Monday. Along with this, State Bank of India’s chairperson Arundhati Bhattacharya presented a partial report card on the impact of demonetisation.
Bhattacharya told reporters that there is no clarity on what will happen once the withdrawal limit is raised by RBI as there is no clarity on how long the money will stay in the system. However, she added, “By the end of February, we will see some amount of normalcy being restored.” She further added by March, the sector will have proper picture of the impact. On Sunday, the bank slashed its one-year marginal cost of lending rate (MCLR) by 0.9 per cent, which now stands at 8 per cent. SBI’s 15 per cent of the total home loan customers are in MCLR loan and all its new loans will be under MCLR. On the other hand, 40 per cent of its corporate customers are under MCLR and this figure is expected to change rapidly, added SBI chief.
As per the new products, bridge loan rates for first year is 10.45 per cent and second year, it will be 11.45 per cent. This loan targets people who want to upgrade to new homes and are unable to sell their existing homes. The second product ‘Instant home top-up loan’, the rates stand at 9 per cent. She further stated that all the rates are based on what will happen in the coming months. The bank is looking at developing a product to attract more non-salaried segment. She believes that this slew of products will boost home loan segment, which was nil during demonetisation. “In auto, we have seen recovery,” she added. “Originally, we thought only 10-15 per cent of deposits would stay. But subsequently, after long brainstorming, there is a trend emerging that 40 per cent of it will stay,” revealed Bhattacharya.
Commenting further about the normalcy factor, she stressed that already Rs 8.5 lakh crore is in circulation and as soon as it reaches Rs 10 lakh crore, some normalcy will be achieved. “Rs 10 lakh crore will be achieved by end of January itself. Even today, the (new) Rs 500 denomination is less than Rs 2000 denominations.” The bank witnessed 70 per cent in the deposit of the new notes, before end of demonetisation. “This means that new notes have gone back to circulation. So, there will be 100 per cent new notes coming. As 500 banknotes gets in more and more, there will more changes, she believes. “We are giving one more month after January that is February and we expect all the cash transaction happening to the extent that is possible. Then, we want to give one more month to see how the deposits behave.”
During the 50-day period, SBI’s CASA increased by 483 basis points. The bank also revised its growth target which was predicted at 11-12 per cent but at present, it is expected to be 6.7 to 6.8 per cent. “We are still hoping that we can take it up to 8-9 per cent. But with three months left, it is difficult envisage,” she added.
