State Bank of India will seek clarity from the Reserve Bank of India (RBI) on introduction of the fixed-floating interest rate scheme for home loans.
Speaking to reporters, SBI chairman Rajnish Kumar said the need for such a product was felt after the regulator mandated repo-linked home loan rate.
He said the banks needed to find out a way on how to offer home loans with a fixed rate for a tenure of 5-10 years and a floating rate after that.
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The linking of floating rate loans with repo rate has created challenges of asset liability mismatch, he said.
The SBI chairman also said the bank was ready to become the convenor of the State-level bankers committee (SLBC) of Leh & Ladakh, after the region becomes a Union Territory following the proposed bifurcation of Jammu & Kashmir State. Jammu & Kashmir Bank is the current SLBC convenor bank of the State.
SBI has opened its fourteenth branch in Ladakh region, at Diskit village in the Nubra valley, which is over 100 km from Leh and has a population of 1,760 as per the 2011 census.
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“The emphasis will be on the personal loan segment, such as education and housing loans,” Mr. Kumar said.
“There is a good scope for MSME loans also. However, the scope for agriculture and industry is limited,” he said.
“When there is development, demand for funds will come. We can meet that demand,” Mr. Kumar said.
On the issue of mergers among public sector banks, Mr. Kumar said they would become stronger because of consolidation. It would be difficult for small banks to sustain themselves due to capital requirement, particularly in the area of technology.