Posts Tagged ‘Canara Bank’

Indian Banking System Witnesses Slowdown in Deposit Growth

Despite deposit rates being revised by various commercial banks, the Indian banking system is witnessing a lull in deposit growth, according to data released by the Reserve Bank of India (RBI). On a year-on-year (YOY) basis, the deposit growth in the banking system rose 14.79% (34 bps higher over the previous fortnight) to Rs 46,90,703.28 crore during the fortnight ended September 10. Further, during the previous fortnight ended August 27, 2010; the deposits mobilized by banks grew by 14.45% to Rs 46,70,237 crore. Hence, the deposits collected by banks went up by Rs 20,465 crore, against an increase of around Rs 38,658 crore in the previous fortnight.

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People from the top management of various banks are citing their reasons for this lull. B A Prabhakar, ED, Bank of India (BoI) said, “Like credit growth, deposit growth is looking sticky. It is because people may be holding a lot of cash in hand.” Further, HSU Kamath, ED, Canara Bank, said, “People are putting their money in other schemes like post office savings schemes, mutual funds and stock market investment. With the sensex touching 20,000 mark, equity market investments look attractive to the people. It should be one of the causes of slower deposit growth. Now rate of deposits have gone up by 100-200 basis points across the banking industry, that situation will be corrected soon and deposit growth is expected to pick up by the end of September,” he added.

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Industry experts also believe the current rally in equity markets to be the major reason for this slowdown and argue that this jump has lured people’s attention to equity market instruments from the traditional banks’ term deposits. In this backdrop, Reserve Bank of India (RBI) raised repo and reverse repo rates by 25 and 50 basis points (bps), respectively, on September 16, though most banks are yet to follow suit. Worried over this development, RBI is prodding banks to increase their deposit rates.

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Going further, though the central bank had projected 18% growth in deposits for 2010-11, it has not exceeded 15% in this financial year so far.

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Banks Appease Home Loans with Festival Offers :)

Banks appease home loans with festival offers

Banks appease home loans with festival offers

Banks are coming out with festival schemes on home loans ahead of Diwali.

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The move is aimed to increase credit demand.

Meanwhile, deals include teaser rates for initial years, amid some lenders providing alternative to shift to either fixed or floating rates in following years.

Lenders like Canara Bank, Bank of Maharashtra (BoM) and Dena Bank are offering fixed-rate loans for the first five years, and afterward, linking the loans to their prime lending rates.

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However, others like Bank of India are offering fixed-rate loans for the first two years.

Besides, SBI is offering fixed rates for the first three years.

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Moreover, the competition to gain market share has resulted in a small price war.

Development Bank of Credit introduced a fixed rate of 7.95 per cent for the first year, which is the lowest for the first year, in any case. From the second year onwards, the home rates will be linked to floating rate loans.

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BoM and Dena Bank offer a fixed rate of 8 per cent for loans up to Rs 30 lakh in the first two years.

Canara Bank offers 8 per cent in the first year for Rs 30 lakh and SBI offers 8 per cent for the first five years for loans up to Rs 5 lakh.

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Summer sales during the existing year were flat due to uncertainties.

Now, builders and lenders are making a fresh pitch to push sales during Diwali through limited period offers.

Most banks have also waived off the processing fee during the festival season.

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