Big fishes eat smaller fishes. This is
a very old proverb as also a ground reality. Rich exploits poor. One who has
vast volume of resources misuses his resources to crush others who has less of
resources. Majority of powerful person in the country exploits and tortures
their subordinates and treat their juniors as slave , a culture inherited from
British regime. Elder brother in the family many times try to snatch business
of younger brothers. This happens in India. ( Read news items given below Loan market: State Bank's gain is loss for others)
Similarly State Bank of India which has been elder brother in banking fraternity
has enough CASA to reduce base rate to minimum level which younger brother cannot.
Please keep in mind that all state run banks are children of the same
government .This is painful that in greed of profit , state run banks are
competing among themselves whereas they are supposed to serve common men ,
involve themselves in social welfare activities and to
compete with private banks.
But unfortunately it is only due to wrong policies
of the government state run banks are snatching business of each other and all
banks ultimately causes loss to none other than the same Indian government.
When small banks incurs loss or when big bank incurs loss, in both the cases it
is taxpayers money which is sacrificed, it is the same government which has to
provide the support of capital .
It is therefore not astonishing to me that business of SBI has
grown by causing erosion i business of other sister concern banks. In private sector,
each unit of Tata group works for each other to give maximum advantage to Tata
Family.. But in public sector each unit work for the benefit of individuals who
are empowered to run the business , work for the ministers, work for bosses but
never for the government , for the common men and for the country as a
whole .
Unhealthy interest war among various public sector banks is
creation of wrong policies of the government. Instead of keeping uniform
interest rates in all banks, our clever government has allowed them full
freedom to decide their own rate structure and as a consequence damage the
business of other banks that are also part of the same family.
It is to be noted here that Volume of Non Performing Asset is still
highest in State Bank despite the fact that they have have provided lacs
of crores of rupees as interest free government fund . One experienced
banker can understand and imagine the likely pitiable position of SBI if all
government funds are removed from SBI.
Due to heavy CASA deposit , it is
only SBI which can survive at Base Rate9.25% which is lowest among banking fraternity and hence It
is SBI which is snatching the good business of other sister banks and causing
ultimate loss to the same government under whom all nationalised banks are
supposed to work.
Not only this ,there is unhealthy
competition among public sector banks including SBI in snatching and procuring
bulk deposits from various departments of the government and from various cash
rich public sector enterprises. They do
not hesitate in spending crores of rupees to offer gifts and to spend on
extending red carpet welcome to officials of these bulk depositors. They are
also ready to offer higher interest rates on deposits they acquire even at the
cost of profitability of banks and wages of bank staff only to achieve their
deposit targets and to earn good will of ministers. These corrupt bankers never
bother about adverse impact on their financials as also on their asset quality
only due to unhealthy competition in
interest rates
It is only the tax payer money which
is lost ,when SBI incurs loss or when Vijya Banks or syndicate bank or UCO bank
suffers loss or when any other public
sector banks suffers loss.
At the bottom of this write up ,you will find some interest comments from facebook viewers and the response thereon
Loan market: State Bank's gain is loss for others
News From Business Standard 15th Feb 2013
The surge in demand was evident in December and the trend has continued in January. As a result, till January, on a year-on-year basis, SBI has bettered the industry by clocking a little over 17 per cent growth, compared to 16 per cent loan growth of all banks.
About 25 per cent of this incremental growth is due to takeover of loans from other banks. “We have seen a surge in loan growth. About 30 per cent of this incremental growth is for working capital, while the rest is term loans. We are also getting other banks’ business, which has contributed about 25 per cent to the incremental loan growth,” Chairman Pratip Chaudhuri said during an interaction with the media while announcing the third quarter results.
SBI was able to get others’ businesses as it has the advantage of having the lowest benchmark loan pricing rate, which is the base rate. After the latest round of rate cuts by banks in early February, after the Reserve Bank of India lowered the cash reserve ratio and the repo rate by 25 bps each in the third quarter review of the monetary policy, SBI’s base rate, at 9.7 per cent, is lower by 50-55 basis points, compared with most other public sector banks. During the third quarter, the difference was 70-75 bps.
The base rate is what all loan rates are linked to. Banks are not allowed to offer an interest rate below the base rate, except for a few categories as specified by the banking regulator. According to Diwakar Gupta, managing director and chief financial officer, the loan shifting is more pronounced in the case of retail loans. Home loans, for example, are being sanctioned at Rs 150 crore a day and 25 per cent of the fresh disbursement is due to customers shifting their preference towards SBI. The bank charges 9.95 per cent for loans up to Rs 30 lakh, the lowest among banks.
The bank has also seen a demand for loans from the infrastructure sector, like power, refinery and road projects.
Loan disbursement in the large corporate segment has shown an impressive growth of 25.78 per cent year-on-year till December, while retail advances have grown by 14 per cent. In retail, auto loans staged a growth of 31.25 per cent while home loans grew by 14.28 per cent.
The sector in which SBI is cautious is the mid-sized corporate segment, which is the biggest contributor to non-performing asset. Till December, loan disbursement in the mid-sized corporate segment have seen a growth of 6.95 per cent
SBI Q3 net profit rises marginally by 4%
Country's largest lender SBI (State Bank of India) today reported a marginal 4.08 per cent increase in net profit at Rs 3,396 crore for the third quarter ended December 31, 2012, mainly on account of higher provisioning for bad loans.
State Bank of India (SBI) had a net profit of Rs 3,263 crore in the October-December quarter of 2011-12 fiscal.
The total provisioning of the bank stood at Rs 4,394.70 during the December quarter, up from Rs 3,996.97 crore in the corresponding period last fiscal, SBI said in a statement.
The gross Non-performing Assets (NPAs), which represents portion of bad loans, stood at Rs 53,457 crore at the end of December, up from Rs 40,098 crore in the year ago period.
The gross NPA as a percentage of total loan rose to 5.30 per cent during the quarter, from 4.61 per cent in the year ago period. The net NPA was at 2.59 per cent of loans in the December quarter.
The Net Interest Income (NII), however, declined to Rs 11,154 crore during the quarter, from Rs 11,518 crore in the year-ago period.
Total income of the bank rose to Rs 33,992 crore during the third quarter, from Rs 29,787 crore in the corresponding period a year ago.
On a consolidated basis, SBI's net profit rose 7.64 per cent to Rs 4,648 crore during the October-December quarter. It was Rs 4,318 crore in the year ago period.
Shares of SBI were trading at Rs 2,233.30, down 0.96 per cent in the afternoon trade on the BSE.
State Bank of India Q3 net profit rises 4%, bad loans weigh
(Reuters): State Bank of India, the country's biggest lender, reported a 4 percent gain in quarterly net profit, the smallest increase in more than a year, as higher provisions for bad loans and slower loan demand hurt growth.
Standalone net profit rose to 33.96 billion rupees ($631.40 million) for the quarter ended December from 32.6 billion rupees a year earlier, the bank said on Thursday.
Analysts, on average, had expected a net profit of 36.96 billion rupees.
SBI's standalone non-performing loan ratio of 2.59 percent of assets for the quarter compares with 2.2 percent a year earlier.
http://www.indianexpress.com/news/sbi-q3-net-profit-rises-marginally-by-4-/1074134/0
Govt banks' profits erode as chiefs worry about NPAs
KOLKATA: The sustained focus of new chiefs at state-run banks on cleaning up books has caused steep profit drop, denting investor confidence and widening gap with private peers.
Bank of Baroda and Canara Bank had new chiefs just a few weeks ahead of their quarterly results. And the first thing S MundraBSE -3.79 % and RK Dubey did was to increase provisioning, pushing net profit lower than market expectations.
"Management changes in public sector banks have typically been accompanied by negative surprises in financial numbers in one or two quarters," said Vaibhav Agrawal, vice-president for research and banking at Angel Broking. "Hence, it makes sense for investors to be a little cautious when management changes happen."
HDFC BankBSE 1.65 % is valued 1.5 times more than Canara Bank, despite the state-run bank being bigger in terms of assets. "In public sector banks, frequent changes of bank chairmen or lack of long tenures, at times, lead to some inconsistency or discontinuity in policy implementation," said Robin Roy, PwC India's associate director for financial services. "Every chairman comes with a separate set of strategic themes, aligned to the expectations of their owners."
Analysts feel the act of cleaning up balance sheets immediately after taking over is almost a trend now and happens too often to be a mere coincidence. "Perhaps bank chairmen want to take tough decisions very early in their tenure so that they can show good results progressively," an analyst said on condition of anonymity.
SBI's almost 100% fall in net profit on higher bad loan disclosure and provisioning to cover it in 2011-12, immediately after Pratip Chaudhuri took over the baton from OP Bhatt.
-
-
Siddhartha Guha Basically it is the inefficiency of the smaller Banks which results in the business coming to SBI. Can SBI snatch business from private sector Banks. For Bulk Deposits and Govt business, the private sectors are much more aggressive and can go to any extent to grab the business.As regards Govt's contribution, what made GOI take over the share of RBI and now does not deliberately allow SBI to raise money from market as GOI's share will be diluted. What prevents the smaller Banks to approach market for raising capital. It is their inefficiency and GOI.
-
Jain Danendra My point of focus is to stop unhealthy and avoidable competition among various banks which all are part of the same government. Sometimes SBI snatches business from PNB , some times PNB from IOB and so on...I do not want to dispute the capacity of private banks to compete with public banks on the basis of their strong marketing force and devoted manpower.
-
Jain Danendra Dear Mr Guha , if inefficiency is the key reason for rise in business of one bank and growth of business of the other , and if for the sake of profit it is necessary to allow interrest war among banks of the same government , it will be justified to allow various branches of State Bank to takeover business from other branches of State bank and similarly branches of other bank to snatch business of branches of smae other bank.
-
Siddhartha Guha You suggested corruption in PSBs. I have seen for myself rampant and blatant corruption by Prvt Sector Banks for doing business. Regarding eating of businesses of smaller fish, SBI had a policy at one time and I had been present in one of the meetings where we had been taken to task by the top Mgmt for trying to take more business from our associates at the behest of the Company.
-
Jain Danendra My dear friend I desired to precipitate a view that competition among public sector banks of the same government should be avoided in the larger interest of the customer and the tax payers and the common men of the country. After all the banks were nationalised four decade ago to help bank staff who were tortured by bank management and to help villagers who were exploited by local money lenders.
-
Jain Danendra corruption is condemnatory wherever it is, it is a sin if it occurs in private banks or it occurs in public sector bank . Therefore corruption in PSBs cannot stand justified only because it is rempant in private banks too
-
Jain Danendra It is ironical that when there is talk of wage hike of bank staff, they come together and talk of Banker's unity. When it is decided by government to waive the loans of farmers , all government banks have to execute such decision , not private banks. When government has to execute the policy of Financial exclusion , only PSBs are pressurized to implement even at the cost profitability of these banks. When a political ly strong person has to seek finance from bank , it is only PSB which have to sacrifice bank's policy and oblige powerful ministers and corporate
-
-
Francisco Sebastian D'anconia So what do u want? Every Bank should make such sacrifices or no one should?
-
Siddhartha Guha I am in complete agreement with you in this regard. thanks for voicing this.
Siddhartha Guha
-
Jain Danendra All public sector banks should be governed b y same policies and uniform interest rate structure and only service quality should be the applied for attracting new customers. There should be more stringent rules for takeover of accounts from other banks and culture of mutual sharing of information among bankers should be reintroduced.
- Siddhartha Guha Basically it is the inefficiency of the smaller Banks which results in the business coming to SBI. Can SBI snatch business from private sector Banks. For Bulk Deposits and Govt business, the private sectors are much more aggressive and can go to any extent to grab the business.As regards Govt's contribution, what made GOI take over the share of RBI and now does not deliberately allow SBI to raise money from market as GOI's share will be diluted. What prevents the smaller Banks to approach market for raising capital. It is their inefficiency and GOI.
- Jain Danendra My point of focus is to stop unhealthy and avoidable competition among various banks which all are part of the same government. Sometimes SBI snatches business from PNB , some times PNB from IOB and so on...I do not want to dispute the capacity of private banks to compete with public banks on the basis of their strong marketing force and devoted manpower.
- Jain Danendra Dear Mr Guha , if inefficiency is the key reason for rise in business of one bank and growth of business of the other , and if for the sake of profit it is necessary to allow interrest war among banks of the same government , it will be justified to allow various branches of State Bank to takeover business from other branches of State bank and similarly branches of other bank to snatch business of branches of smae other bank.
- Siddhartha Guha You suggested corruption in PSBs. I have seen for myself rampant and blatant corruption by Prvt Sector Banks for doing business. Regarding eating of businesses of smaller fish, SBI had a policy at one time and I had been present in one of the meetings where we had been taken to task by the top Mgmt for trying to take more business from our associates at the behest of the Company.
- Jain Danendra My dear friend I desired to precipitate a view that competition among public sector banks of the same government should be avoided in the larger interest of the customer and the tax payers and the common men of the country. After all the banks were nationalised four decade ago to help bank staff who were tortured by bank management and to help villagers who were exploited by local money lenders.
- Jain Danendra corruption is condemnatory wherever it is, it is a sin if it occurs in private banks or it occurs in public sector bank . Therefore corruption in PSBs cannot stand justified only because it is rempant in private banks too
- Jain Danendra It is ironical that when there is talk of wage hike of bank staff, they come together and talk of Banker's unity. When it is decided by government to waive the loans of farmers , all government banks have to execute such decision , not private banks. When government has to execute the policy of Financial exclusion , only PSBs are pressurized to implement even at the cost profitability of these banks. When a political ly strong person has to seek finance from bank , it is only PSB which have to sacrifice bank's policy and oblige powerful ministers and corporate
- Francisco Sebastian D'anconia So what do u want? Every Bank should make such sacrifices or no one should?
- Siddhartha Guha I am in complete agreement with you in this regard. thanks for voicing this.
Siddhartha Guha - Jain Danendra All public sector banks should be governed b y same policies and uniform interest rate structure and only service quality should be the applied for attracting new customers. There should be more stringent rules for takeover of accounts from other banks and culture of mutual sharing of information among bankers should be reintroduced.
In this connection another factor is the smaller psbs inability to attract proper personnel.I have seen the smaller banks asking for soft copy of our proposals so that they will just cut and paste and prepare the advance proposal.If this has been the tendency then how do you expect the business to come to them.
ReplyDelete