| Purwar: New ideas
Calcutta, Feb. 7: The State Bank of India (SBI) may grant additional powers to the bank’s circle and zonal offices across the country in order to expedite the loan sanctioning process. This move was proposed by the newly-inducted SBI chairman A. K. Purwar.
The bank is considering enhancing the loan sanction limits available to head offices with respect to fresh loans, standard assets and technical write-offs.
Currently the loan sanctioning limit of the bank’s circle offices is Rs 25 crore for corporate accounts, Rs 15 crore for non-corporate accounts and Rs 5 crore for individuals.
The zonal office has the power to sanction Rs 6 crore for corporate accounts, Rs 3 crore for non-corporate accounts and Rs 1 crore for individuals.
SBI sources said that the bank is expected to substantially hike this amount to almost double in terms of loan sanctions and technical write-offs.
“The bank wants to bring in more efficiency in its functioning and so it has decided to delegate more powers to the local head offices across the country. Moreover, there is enormous competition from private sector banks. The private sector banks are extremely aggressive when it comes to loan sanctioning,” SBI officials said.
“The growing credit requirements of companies due to a corresponding increase in the cost of production and sales have led the bank to review its current loan sanction limits. With the passage of time, things have become more expensive now than they were around 5-10 years ago. Projects that are undertaken now will have to be funded keeping in mind these changes and the current economic scenario,” they added.
SBI sources said that enhancement of loan sanctioning limit of the local head offices is a beginning towards streamlining the operations of the bank.
However, banking circles are sceptic whether the enhancement in loan sanctioning limit will enhance the overall advance portfolio of the bank.
“There is hardly any big project that is coming up. The banks are flushed with funds but there are no takers,” they said.
But SBI officials say that in the current financial year they have registered a good growth in the advance portfolio. For the nine months ended December 31, 2002, the advances of the bank’s Indian operations have gone up by 12.35 per cent to Rs 11,8984 crore against Rs 10,5905 crore in the corresponding previous period.