SBI closes down two Pravasi schemes

The State Bank of India (SBI) has decided to close down two schemes targeted at non-resident Indians following lukewarm response.

The two schemes were aimed to tap funds from the Resurgent India Bonds (RIB) proceeds. The schemes managed to mobilise just about Rs 2,300 crore.

Effective December 5, SBI closed down Pravasi Samriddhi and Pravasi Vaibhav schemes, which were introduced in October to tap the RIB proceeds, stated SBI chairman and managing director A K Purwar. He was speaking on the sidelines of the Bank Economists' Conference 2003 in Mumbai.

SBI had anticipated mobilising about 30-35 per cent of the total RIB proceeds of $ 5 billion. Later it downward revised its expectations to 15 per cent.

Other banks "" including ICICI Bank and Union Bank of India "" also introduced special schemes aimed at retaining a large portion of the RIB proceeds within the country.

While these schemes were to be kept open for a fortnight, the lukewarm response resulted in banks extending the last date to November 30 and beyond.

Meantime, SBI expects its non-food credit to rise by 15 per cent in fiscal 2004. Purwar said: "I am expecting 15 per cent growth this year," after expanding by 12-13 per cent last year.

He added that the bank's customers are talking of expansion, and this would account for the credit offtake.

Demand for bank loans is picking up in the country as corporates seek to expand capacity after a lull of over two years.

The pick-up in commercial lending will help broaden banks' earnings, which in recent years, have depended heavily on treasury operations and retail lending.