Borrowers will feel the benefits of SBI merger with its associates: Arundhati Bhattacharya
MUMBAI: The benefits of merger of State Bank of India with its five associates will not be felt by the bank but its borrowers as well. The bank is gearing up to offer lower interest rates on home, car and personal loans to thousands of customers migrating from the associate banks to the parent SBI.
“As a result of the merger the borrowers can expect to get lower rates of interest at the time of renewal or at the time of origination as SBIs rates are obviously the best in the market,” said Arundhati Bhattacharya the chairman of the bank.
SBI which is the largest mortgage lender is offering an interest rate of 8.6% for women borrowers and 8.65% to other borrowers, on loans up to Rs 75 lakh. While the interest rate charged by its associates range anywhere between 8.85% - 9.2% which is roughly 20-50 bps higher.
Also Read: SBI hikes minimum balance for savings a/c, other charges
“The cost of funds for associates was more than ours that is the reason why their borrower rates were more than ours,” added Bhattacharya.
The bank on Monday also cut its base rate steeply by 15 basis points to 9.1 per cent. The new rates are effective from April 1st. SBI made no changes to its marginal cost of lending rate which it had cut steeply in January this year. SBI’s one-year marginal cost of lending rate — the benchmark to which home loans is linked — stands unchanged 8%.
The bank which had offered a voluntary retirement scheme for its associate bank employees said that at least 2800 had so far opted for the arrangement out of the 12000 eligible employees.
The bank also said that the entire merger process will be completed by May and it will start the cost rationalization process in the second quarter of the current financial year.
“The reorganization process will get completed by April 24 then we start the data merger which will happen on the weekend one bank at a time,” Rajnish Kumar, MD, SBI said. “So, within May 27, the entire granular level data merger will be completed. In case of BMB and treasury the granular data merger has already been completed.”
Bhattacharya also said that the bank had initiated its own internal asset quality review in associate banks and had to set aside Rs 8600 crore of additional provisions to bring all account classification in line with the parent.
“We have undertaken ourselves an AQR, in respect of all the common accounts,” Bhattacharya said. “This is not something that was mandated by the RBI, and for that we have taken more than Rs 8600 crore of additional provisions we have created for those accounts. We believe that even though the numbers look bigger, but we have much better ability to resolve this.”
“As a result of the merger the borrowers can expect to get lower rates of interest at the time of renewal or at the time of origination as SBIs rates are obviously the best in the market,” said Arundhati Bhattacharya the chairman of the bank.
SBI which is the largest mortgage lender is offering an interest rate of 8.6% for women borrowers and 8.65% to other borrowers, on loans up to Rs 75 lakh. While the interest rate charged by its associates range anywhere between 8.85% - 9.2% which is roughly 20-50 bps higher.
Also Read: SBI hikes minimum balance for savings a/c, other charges
“The cost of funds for associates was more than ours that is the reason why their borrower rates were more than ours,” added Bhattacharya.
The bank on Monday also cut its base rate steeply by 15 basis points to 9.1 per cent. The new rates are effective from April 1st. SBI made no changes to its marginal cost of lending rate which it had cut steeply in January this year. SBI’s one-year marginal cost of lending rate — the benchmark to which home loans is linked — stands unchanged 8%.
The bank which had offered a voluntary retirement scheme for its associate bank employees said that at least 2800 had so far opted for the arrangement out of the 12000 eligible employees.
The bank also said that the entire merger process will be completed by May and it will start the cost rationalization process in the second quarter of the current financial year.
“The reorganization process will get completed by April 24 then we start the data merger which will happen on the weekend one bank at a time,” Rajnish Kumar, MD, SBI said. “So, within May 27, the entire granular level data merger will be completed. In case of BMB and treasury the granular data merger has already been completed.”
Bhattacharya also said that the bank had initiated its own internal asset quality review in associate banks and had to set aside Rs 8600 crore of additional provisions to bring all account classification in line with the parent.
“We have undertaken ourselves an AQR, in respect of all the common accounts,” Bhattacharya said. “This is not something that was mandated by the RBI, and for that we have taken more than Rs 8600 crore of additional provisions we have created for those accounts. We believe that even though the numbers look bigger, but we have much better ability to resolve this.”
