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 Plans to Monetise Non-Core Assets, List Few Units
- State Bank of India (SBI), the country’s largest lender, on Tuesday said it was planning to monetise non-core assets and list some of its subsidiaries for meeting capital needs as well as Basel III global risk norms, which will kick in from March 2019.
- Public sector banks need Rs 1.80 lakh crore to meet Basel III norms, while the government will provide only Rs 70,000 crore, SBI chairperson Arundhati Bhattacharya said, adding that the rest will have to be borne by banks through profits and non-core assets.
- “For instance, for us, we have a number of non-core assets which we are looking at monetising. We also have very successful subsidiaries which we have not listed. So, we can look at those as well,” she said at an Assocham event here.
- The bank has already announced plans to lower its stake in insurance ventures SBI Life Insurance and SBI General.
- In its life insurance venture, SBI proposes to sell an up to 10 per cent stake, while it may be about 23 per cent in case of its general insurance company.
- “One thing I would like you to be assured about is that there is a lot of thought going (into it) and the banks will be capitalised enough in order to have good capital to support the economy,” she added.
- She emphasised that meeting Basel III requirement is going to be a challenge.
- “It is a challenge because India is basically capital starved. On top of that, you need capital to grow. And to compound all of this, you (have) regulatory requirements on keeping capital at higher level than Basel,” she said.
- Stating that India does not require such stringent capital norms, she said, “Basel template as it was created was really and truly not meant for a country like India which has plain vanilla banking. West, they have the investment led model. They have got many, many complicated products.”
- Basel norms basically provide risk templates for banks andamount of capital it is required to keep against lending.
- On interest rate, Ms Bhattacharya said, since banks play a part in providing social security, they cannot provide negative rate of return to savers.
- If the cost of borrowing for banks comes down, the lending rate can be lowered, she added.
Important Banking News: IndiaFirst Life Enters Pension Space, Launches Retirement Plan
- Private sector firm IndiaFirst Life Insurance, a joint venture between Bank of Baroda, Andhra Bank and Legal and General of the UK, on Tuesday entered into the pension sector with launch of a 9 per cent guaranteed retirement plan.
- IndiaFirst Guaranteed Retirement Plan is a non-linked, participating, endowment, deferred pension plan. This plan is for customers who are conscious to plan for their retirement and want to remain financially young, IndiaFirst Life Insurance managing director and CEO R M Vishakha said.
- “It is a safe and secured long-term financial plan which offers a guaranteed return of 9 per cent on total premiums paid during the initial years, and the benefit of participating in the company’s profits in the latter years,” she said.
- In addition, it offers policyholders flexibility in premium payment. A customer can choose to pay one time, under the single premium mode, or pay for a limited period of 5 to 10 years for a plan term of 10 to 35 years, or select a payment and plan term of 10 years to anytime between 15 or 35 years.
- The policyholder, who has option to receive the funds between 40 and 80 years, will also get a tax benefit on the premiums paid, as per the Income Tax Act.