Country’s largest bank, State Bank of India (SBI) has reduced its interest rate on its special 1,000 day fixed deposits with an aim to protect its net interest margin. The bank has reduced rates on 1,000-day deposit scheme by 25 basis points to 7%. With this reduction the SBI deposit rates will be at par with other public sector banks in the industry. The bank has not introduced cut on any other time slab. The revised rates will be effective from September 8.
Since the launch of 1000-day deposit scheme SBI has witnessed maximum collection thus with the cut in the rates in this scheme bank will be able to reduce its interest cost considerably. Earlier SBI was offering 7.25% on its 1000-day scheme which was slightly higher in comparison to the rate being offered by most of its peers in the industry for that period (for 1000 day or between two to three years).
Whereas most of the large banks had reduced their deposit rates few weeks back. Big banks like Union Bank of India, Punjab National Bank and ICICI Bank are offering 7% for two to three years (which is comparable to 1000 day deposits), while Bank of Baroda has reduced rates to 6.5% and HDFC Bank is offering 6% for the same period.
According to bank analyst SBI’s margin- the difference between the cost of funds and yield on advances, have been under pressure due to slowdown in credit growth. For quarter ending June 09, bank net interest margin stood at 2.3%, which is down by 63 basis points over March 09. Earlier SBI officials had given indications that in the second quarter no significant improvement can be expected in the margins.
Recently in an interview with media, O P Bhatt had stated that due to poor demand in credit SBI has been parking over Rs 65,000 crore daily with the Reserve Bank of India’s reverse repo window which gives a return of 3.25%.
Thursday, September 10, 2009
Wednesday, September 2, 2009
Tata Motors to raise funds by re-launching fixed deposit scheme
Tata Motors is again announcing fixed deposit (FD) scheme to raise up to Rs 1,500 crore. The company will be launching the scheme for shareholders and the public. Tata Motors chairman Ratan N Tata at the annual general body meeting of the company in Mumbai informed shareholders, “We will just be announcing the revised FDs scheme.”
Addressing the reporter after Tata’s AGM with shareholders, Tata Motors chief financial officer C Ramakrishnan said, “Till now we have raised around Rs 2,500 crore through the existing FD scheme. After the new accounting norms that came into effect from April 1, the cap on borrowings through fixed deposits has gone up from Rs 2,700-Rs 2,800 crore to Rs 4,000 crore. So now we can raise additional funds through the deposit scheme.
The revised scheme will open for shareholders and public on Wednesday.”
Currently Tata Motors is giving 8.75 per cent interest on deposits of Rs 20,000 for a period of three years. The company’s aim to launch FD scheme was to raise funds to repay the $2.3 billion bridge loan after the possession of Jaguar and Land Rover in 2008. Later on company reduced the interest rates on cumulative fixed deposits of Rs 20,000 for three years from 12 per cent to 8.75 per cent.
The industry officials informed that Tata Motors is likely to increase the rate of interest up to a competitive level of Mahindra Finance’s ongoing scheme. Mahindra Finance is offering 10 per cent interest on a minimum deposit of Rs 10,000 for a period of three years. However most of the public and private sector banks have recently reduced their deposit rates. India’s top two banks - State Bank of India and ICICI Bank are offering interest rates around 7.25 per cent to 7.5 per cent on fixed deposits with five-year maturity.
An analyst with Mumbai-based brokerage informed Tata Motors is likely to invest the funds being raised through FD scheme, to meet the capital expenditure and technology up-gradation requirements of the company and JLR
Addressing the reporter after Tata’s AGM with shareholders, Tata Motors chief financial officer C Ramakrishnan said, “Till now we have raised around Rs 2,500 crore through the existing FD scheme. After the new accounting norms that came into effect from April 1, the cap on borrowings through fixed deposits has gone up from Rs 2,700-Rs 2,800 crore to Rs 4,000 crore. So now we can raise additional funds through the deposit scheme.
The revised scheme will open for shareholders and public on Wednesday.”
Currently Tata Motors is giving 8.75 per cent interest on deposits of Rs 20,000 for a period of three years. The company’s aim to launch FD scheme was to raise funds to repay the $2.3 billion bridge loan after the possession of Jaguar and Land Rover in 2008. Later on company reduced the interest rates on cumulative fixed deposits of Rs 20,000 for three years from 12 per cent to 8.75 per cent.
The industry officials informed that Tata Motors is likely to increase the rate of interest up to a competitive level of Mahindra Finance’s ongoing scheme. Mahindra Finance is offering 10 per cent interest on a minimum deposit of Rs 10,000 for a period of three years. However most of the public and private sector banks have recently reduced their deposit rates. India’s top two banks - State Bank of India and ICICI Bank are offering interest rates around 7.25 per cent to 7.5 per cent on fixed deposits with five-year maturity.
An analyst with Mumbai-based brokerage informed Tata Motors is likely to invest the funds being raised through FD scheme, to meet the capital expenditure and technology up-gradation requirements of the company and JLR
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