Amid weak demand for corporate credit, bankers are looking to boost their retail portfolios. B Sriram, managing director for national banking, State Bank of India, in an interview with Shashidhar KJ, talks about the strategy for the festive season.
How is the demand for car loans for the festive season and what is your strategy?
The demand is picking up and I can see a perceptible increase in numbers. Till last month, we
were approving 400-600 car loans per day and the number has been going up since. As on September 26, we touched about 2,000 loans. Even in terms of amounts, from about R30-40 crore disbursal per day, it has touched R100 crore
in car loans. We are now looking
at about 75,000-80,000 car loans
per month.
We didn?t offer any sops and the interest rates were more or less the same, but what we did was slightly tweak the eligibility criteria for car loans. After August and September last year, some of the default rates had gone up and we had raised the eligibility norms but, now, we have eased these.
We also have a dealer finance scheme, an SME product, where some benefit in interest rates is given to dealers. For example, the dealer buys 100 cars from the manufacturer, we fund that dealer for 100 cars for two months at very fine interest rates. Now, the intention is that these 100 cars will finally be financed by us on the retail side also. For the festive season, we have waived processing fees, but there are no rate cuts.
And what about home loans?
Home loans, too, are picking up and we are sourcing about
R200 crore loans and sanctioning about R150-160 crore. We would like to push sourcing up to
R300 crore per day and sanction loans about R260-270 crore.
We are also tagging home loans to developer loans and providing an end-to-end solution. We are trying to get the cash management product of developers.
We have about 20-30% NRI customers, so we are trying to get them to remit through us.
SBI had recently cut deposit rates. Is there scope for further cuts?
We had quite a lot of liquidity of about R70,000 crore. At the moment, there is no room for a cut in deposit rates, but we need to see how advances grow.
Your comments on the Jan Dhan Yojana?
We are opening about 2.5 lakh accounts per day. Earlier, we were opening about 40,000 accounts; now, we have touched about 70 lakh accounts.
Earlier, on an average, these accounts used to have about R600-700 as balance. We have to pay 4% as savings charges on these accounts, but we can earn 7% if we deploy these in the reverse repo window. The average balance might be slightly lower at about R400-300 now, but should grow once there is traction from the direct benefit transfers. Once that happens, the average balance will go up to above R1,000 or so.
The overdraft (OD) of R5,000 will be given based on how the account is conducted with the banks. At the moment, there is no mandatory linkage of OD loans to this account.
Accounts opened under Jan Dhan Yojana have two types of insurance. One is accident insurance, which is linked to the RuPay card, provided by payments company NPCI, and they will enter into an agreement with an insurance company.
At the moment, it is HDFC Ergo for about six months. The other insurance part is what Prime Minister Modi has declared — about R30,000 life insurance, per account holder. We could also sell these customers our own insurance and loan products.
