Latest Developments – 01/2009

1. Latest Developments – 01/2009 SBLC Bangalore

2. 01. Margin Money on Home Loan has been increased • To provide a cushion against any fluctuation in real estate market. • It will ensure that only reasonably sound and creditworthy borrowers are financed. • The risk of lending will be lower.

3. 01. Margin Money on Rent Plus has been increased • Due to fall in the rental value. • Due to downturn in the real estate market. • The risk of lending will be lower.

4. 02. National Payment Corporation of India has been set up. • Presently RBI handles all retail payments and settlements activities. • Formation of NPCI will relieve RBI from routines processes as a settlement agency and focus more on its key role. • NPCI will handle all retail payment and settlement activity except RTGS.

5. 03. SBI 1000 a new Domestic Term Deposit has been introduced. • A new maturity bucket has been created for medium term duration. • It will help attract deposits from Central Govt. staff, which have been disbursed arrears as recommended by 6th pay commission. • The rate of interest for deposit scheme is currently the highest in the market. • In the volatile financial market scenario, where the trust and security of the PSBs is exemplified by SBI, it will be easy to market the product.

6. 04. Recently SBI has introduced Mobile Banking. • Mobile phones as a medium for extending banking services have of late been attaining greater significance. • The rapid growth in users and wider coverage of mobile phone growth users and wider coverage of mobile phone networks have made this medium an important platform for extending banking service to the customers. • It is cost effective. • We will be able to attract more new generation customers. • In order to ensure the level playing field for our bank in comparison of Foreign/Private banks.

7. 05. e-invest has been introduced by SBI. • The product is devised as per SEBI guidelines. • A lien will be marked in the investor’s account for the subscription amount and the amount will be debited only if shares are allotted to him. • This will protect investors during the process of IPO issue as he is not out of funds. • The facility is available for all internet banking users having transaction right. • ASBA (Applications Supplied by Blocked Amount)

8. 06. New Business Group has been formed in the bank. • The New Business Groups formed are • (1) Rural & Agri Business, • (2) Corporate strategies and New Business Group, • (3) Treasury and Marketing Group. • It is strategic business initiative taken by the bank to focus on the business opportunities arising out of the emerging growth of rural and international economies. • These initiatives will enable the bank to expand further and tap the business potential available from these new business segments.

9. 07. RBI stresses on IT enabled financial inclusion. • Banking outreach to the remote corners of the country can be achieved through IT enabled financial inclusion. • By use of appropriate technology transaction cost for the bank can be brought down. • No frill accounts were introduced for the common man to start with towards financial inclusion. • Biometric ATMs, General Credit Cards etc. are important new moves towards IT enabled financial inclusion.

10. 08. “Direct Debit Product” has been introduced. • This is a new cash management product. • The product envisages a debit to the accounts of customers both corporate and individuals, initiated from the centralized location. • It facilitates collection of funds for corporate, Mutual funds, Finance companies etc from dealers, investors etc. on a regular basis spread over large number of branches.

11. 09. Focus is given on Electronic Payment System. • Paper based system is costly, time consuming are exposed to risk such a lost in transit, mutilation, etc. • They are also subjected to the process of clearing cycle leading to delay. • Settlement risk is eliminated. • This will speed up migration from paper based system to electronic system.

12. 10. Many products have been introduced for home loan borrowers. • To meet the varied demands of various type of borrowers according to their eligibility in term of age, income, preferences etc. • To meet the competition and exploit the business potential available in this segment. • This will help increase our home loan portfolio.

13. 11. Marketing and Recovery Officers (Rural) have been appointed. • Marketing and Recovery Officers (MRO) would keep focus on marketing the bank’s products in rural areas and give thrust on timely recovery of advances and NPAs. • The recovery of loans would be improved. • MROs can receive cash up to Rs. 5000/ and issues receipts, hence the villagers can avoid the travel for the repayment of their loans, and time/ expenses will be saved for them. • This will not only increase the level of agriculture business in our bank but also will bring down the level of NPAs

14. 12. Bank has introduced “Power Jyoti” scheme recently. • To leverage our CBS platform more effectively. • Only Current account will be opened for educational institutions. • To provide fee collection facility to the institutions through our Core banking branches and credit this account. • Any type of fees like school / college / university fees, competitive exam fees, can be collected through any our CBS branches. • The bank will be able to mobilize low cost deposits from the educational institution.

15. 13. GBU (Government Business Unit) has been set up under NBG. • Government business constitutes sufficient portion of our income and are low cost income. It also mobilizes low cost deposits and is now target of private sectors bank and other commercial banks. • Our share of government Business has come down over a period of time and is under constant threat from other banks. • The new positions (i.e. GBU under NBG,) have been created to keep required focus on this and meet the enhanced competition. • This strategic business unit will help bank to develop proper policies in changed business condition and keep our share intact.

16. 14. Limit for Dairy Plus has been increased to 5 lacs and sub limit has been removed? • It will help to counter competition. • Within the overall ceiling of Rs.5 lacs, loans may be disbursed for different items of expenses like purchase of animals, milking machine, construction of sheds, and purchase of other equipments. • It will provide flexibility and help in enhancement of Agriculture finance. It will also simplify the process and decrease farmers’ problems. • It will simplify the process to the banker who is supposed to verify the end use of fund limit wise, which is difficult.

17. 15. Photographs have been made mandatory for guarantor under Housing Loan? • NPA in Housing Loan is a big problem and also it is long-term loan. To follow up with both the borrower and guarantor, it is necessary to have photographs. • Along with this chances of impersonation by guarantor can be ruled out at the time of revival. Photograph will also help in recovery process.

18. 16. Corporate Governance is necessary in Banking Industry • Good corporate governance encompasses appropriate checks and balances through external and internal audits and accounting, clear division of responsibility, both horizontal and vertical, disclosures and transparency. • This will ensure better stability and greater shareholder interest value. It will be in the interest of its entire stake holders i.e. employees, customers and shareholders. • As per Kumarmangalam Birla Committee recommendations

19. 17. Alternate Channel in need of the hour • Several alternate delivery channels such as ATM, Phone banking, Internet banking, etc. will provide customer satisfaction and convenience. • It will decrease the crowd at the counter and give free time to branch operative to sell and market products. • It will help to improve market share and quality of business. • It will help our bank to retain undisputed leadership in India and compete effectively with new forces of the market.

20. 18. RBI uses Reverse Repo? • Reverse Repo is an instrument of borrowing fund short-term period and simultaneously agreeing to repurchase it at a stated future date for slightly higher price. • Means it is instrument to absorb excess liquidity (fund). • When Increase in oil prices and increased demand of credit have caused inflation to increase, Reverse Repo was hiked to absorb the excess fund in the market. • Similarly, Reverse Repo has now been reduced to increase liquidity in the market.

21. 19. A new Account Named “Recalled Assets A/c” has been created by merging PB and RD a/cs. • Now IRAC classification has been stabilized well. Identification of substandard, Doubtful and loss A/Cs provisioning for them are being done on case-to-case basis at stipulated periods. • Hence, having two accounts to control bad debts have become redundant.