Bad repayments have made public sector and private banks wary of lending new education loans without collateral surety, State Bank of Hyderabad General Manager J. Sitapathi Sarma has said. In the past up to Rs.4 lakh non-collateral loans used to be liberal, but when people began making wrong use of the facility and did not repay properly, banks now think twice before lending in that segment.
Delivering The Hindu Business Line On Campus B.L. Talk on the K.L. University campus on Friday, Mr. Sitapathi Sarma said banking sector would play a major role in the next five years and students of MBA, B.Com and Chartered Accountancy will have a good opportunity in terms of getting employment or starting their own entrepreneurial venture. The State Bank of Hyderabad has many schemes for new entrepreneur with the promoter investing one-third and bank lending two-thirds, he said and added that in some cases the Centre or State government provides seed money to subsidise the investment.
Delivering a talk on ‘Overview of Bank Balance Sheets’, the bank GM said as per the Reserve Bank of India Guidelines 4 per cent had to be Cash Reserve with RBI and 23 per cent as Statutory Liquidity Ratio, which refers to the amount that the commercial banks require to maintain in the form gold or government approved securities before providing credit to the customers.
The profitability of the banks depends on lower NPAs, quantum of large-value funding, cost of fund borrowed from the market for lending and availability of total lendable funds. Lending the funds intelligently to earn higher returns would improve the profitability of any bank, he said. He took pride in telling the students that the SBH had been earning profits year after year from its inception, when the Hyderabad Nawab launched it and made it the controlling agency for minting coins too.
K.L. University MBA Department Director M. Bhaskar Rao in his special address said the students had understood about the bank operations through lucid explanation by the GM. The SBH KL University branch manager Durga Prasad was also present on the occasion.
