Financial Daily from THE HINDU group of publications
Wednesday, Sep 10, 2003
Financial Daily from THE HINDU group of publications Wednesday, Sep 10, 2003 |
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Money & Banking
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Public Sector Banks SBI to be Basel-II compliant: Purwar Our Bureau
Chennai , Sept. 9 STATE Bank of India has committed itself to becoming a Basel-II compliant bank, the bank's Chairman, Mr A.K. Purwar, has said. Basel-II, or the New Basel Capital Accord, is a proposal of the Bank of International Settlements, which basically seeks to bring in new norms on three counts — minimum capital requirement, supervisory review and market discipline, or safer banking practices. The Accord, which will replace the existing 1988 Accord, is feared by many central banks, including the RBI, to be too stringent for banks in emerging countries to follow. The RBI has taken a view that Indian banks that get 20 per cent of their business from abroad only need to follow Basel-II norms. SBI's international operations contribute about 6 per cent of its business. However, the bank had chosen to follow Basel-II, Mr Purwar said. The Chairman said that the bank's retail advances had grown about 40 per cent in the first five months of the current year (but he could not recall the numbers offhand). But since industrial and agricultural credit had not increased much, the overall credit growth was only modest, he said. However, he said he expected credit pick-up from October. Answering a question, he said that the bank had not taken a decision on revising the deposit or lending rates. Mr Purwar said that the bank earned a profit of about Rs 1,000 crore, selling illiquid securities worth about Rs 6,000 crore back to the Government of India. He said that the bank was moving towards 100 per cent computerisation. Already 6,037 of the 9,000-odd branches have been computerised. The process of interconnecting them, through a core banking software, has just begun. For the core banking solution, SBI has purchased software from Financial Network Solutions of Australia, (sold in India by TCS). Mr Purwar on Tuesday launched two new products — an international ATM-cum-debit card and `SBI Credit Khazana', a scheme of concessional lending for the existing home loan borrowers. The debit card, `State Bank Cash Plus', carries a transaction limit of $1,000 per day (or equivalent thereof in other currencies) at ATMs and points of sale, each. "Cardholders can use the card up to their entitlements under the exchange control directives, for legally allowed purposes," says a background note of SBI. Transactions of the cardholder in any currency would be converted into rupees automatically and debited to his account in India. Under the `SBI Credit Khazana', SBI's home loan borrowers can avail a bouquet of retail loans at a concession of 0.25 per cent. The scheme also carries a free accident insurance cover, up to the outstanding amount of the loan. Mr Purwar observed that in the developed countries, retail asset portfolio of banks was usually about half of the total portfolio, whereas in India, it was still at around 18 per cent. This, he said, cued a huge potential for retail loans.
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