Here is today’s important banking news to keep you updated and help you prepare for IBPS and other bank exams:
Important Banking News: SBI Rules Out Further Cuts in Lending Rate This Fiscal
- After reducing its base rate by 40 basis points last year, State Bank of India on Friday ruled out any tinkering with its lending rates in the remaining months of the current fiscal. Last October, SBI had reduced its base rate by 40 basis points, from 9.70 per cent per to 9.30 per cent.
- The nation’s largest lender also ruled out going ahead with its share sale plan this fiscal.
- “I don’t really think (base rate will be cut) so, but maybe once we cross the year end then we will see,” SBI Chairperson Arundhati Bhattacharya told reporters after opening the second ‘InTouch’ branch at Colaba in South Mumbai.
- The rate reduction by SBI was following a 50 bps repo rate cut by the RBI on September 29.
- Earlier this week, private sector HDFC Bank reduced its base rate by 0.05 per cent to 9.30 per cent, matching with that of SBI, and 5 bps lower than its private sector rival ICICI Bank, which is maintaining its minimum lending rate at 9.35 per cent.
- Talking about the new base rate calculation based on the marginal cost of funds, Bhattacharya said the formula will not make a huge amount of difference on base rate but will help in transmission. “Some more amount of transmission will definitely happen but I don’t think it is going to be humongous.”
- However, many analysts have pegged an 80-160 bps reduction in base rate by banks from April when the new method will be in force.
- On the Rs 12,000-crore follow-on public offer that the lender was planning to raise, she said SBI is unlikely to raise the money in this fiscal. The bank had been planning this OFS sale even in last fiscal as market was not conducive.
- After a meeting of its Committee of Directors on December 21, 2015, the bank had said in a regulatory filing that it had got permission to raise up to Rs 12,000 crore by selling Basel-III compliant Tier-II bonds on a private placement basis.
- Following this, SBI had on December 24 raised Rs 4,000 crore through Tier-II bonds on private placement basis under Basel-III norms.
- On the RBI deadline of March 2017 to clean up the balance-sheets, Bhattacharya said banks were in dialogue with the RBI.
- “The RBI is having dialogues with banks. They are saying that where there are accounts which are inherently weak, it is better that we recognise them and we provide against them,” Bhattacharya said.
- Asked about the media reports of her name doing the rounds for the next Sebi chief, the veteran banker said there was no truth in them.
- “This is said by the media. I don’t know. You have to tell me where you get the information from,” she quipped.
Important Banking News: Bank of India Raises Rs 3,000 Crore via Basel-III Compliant Bonds
- Public-sector lender Bank of India on Friday said it has raised Rs 3,000 crore by issuing Basel-III compliant Tier-II bonds.
- The coupon rate on the bonds with a tenor of 10 years is fixed at 8.52 per cent.
- “The bank has raised Rs 3,000 crore by issue of Basel-III compliant Tier-II bonds. The coupon rate is 8.52 per cent and tenor is 10 years,” the bank said in a regulatory filing.
- A Fitch Ratings report earlier this month had said that banks in India will need about $140 billion to ensure full compliance with the Basel-III norms by 2018-19.
- The Basel-III capital regulation has been implemented from April 1, 2013, in phases, to be fully implemented by March 31, 2019.
- Share of the bank on Friday closed at Rs 117.10 on BSE, up 1.87 per cent from the previous close.