Seeking to temper the highly charged-up discourse on the teaser loans and the bank's confrontational approach with the Reserve Bank of India (RBI), newly-appointed State Bank of India Chairman Pratip Chaudhuri on Friday said the bank would “engage” with the central bank to lower the higher-than-comfortable provisioning requirement.
“The current provisioning requirement of 2 percent (on teaser loans) is a bit difficult for the bank when compared with the earlier 0.40 percent,” Mr. Chaudhuri said at his first media interaction at the bank headquarters on Friday.
State Bank of India would “engage with the central bank” to solve the issue, as it does not want to take a belligerent stance against the regulator, he said. “The current product offers enormous value to the customers, it has helped millions to own homes...as a final settlement we would like to have something which delivers value to the customers and also takes care of the regulatory concerns,” he said. Fearing troubles in repayment, the RBI had increased the statutory provision coverage by five times to 2 per cent on the teaser loans — launched first by SBI in days of high liquidity — in the November policy review.
SBI's peers, which after being critical initially, had launched their own teaser rate products, have since then discontinued the offering while the nation's largest lender has persisted with the product.
Mr. Chaudhuri's predecessor, O. P. Bhatt, had publicly said whether the RBI had “understood” the product at all. According to reports, SBI has disbursed around Rs.90,000 crore under its special loans scheme since the product was started in November 2009.
SBI's newly appointed Managing Director in charge of national banking A. Krishna Kumar, said, “There was no battle between SBI and RBI...the problem was only because of some interpretation.”
