SBI officers to go on nationwide strike on Apr 8-9

New Delhi, Mar 23 (PTI) Officers of the country' largest lender the State Bank of India have decided to go on a two-day nationwide strike from April 8 to press for hiring officers and revising pay scales.

"There is a shortage of 7,000-8,000 officers across the country. If you take into account the new branches, this figure will cross 10,000 ," All India State Bank Officers' Federation President T N Goel told PTI.

He further said 25 per cent branches have only one officer, though the core banking solution (CBS) requires minimum two officers in each branch.

In Delhi circle, more than 300 branches are running with a single officer, he added.

Currently, around 65,000 officers are employed in over 11,000 branches of the bank across the country.

The union is demanding minimum two officers at all existing CBS branches and is against opening of new branches without minimum staff and adequate infrastructure.

There is also demanding for improvement of pension scheme, revision of pay scales, regulated working hours, among other things.

The officers' union has threatened to go on an indefinite nationwide strike in May if their demands are not met. PTI

8% SBI HOME LOAN

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Abitha Deepak, BankBazaar.com

8% SBI HOME LOAN

The current happening news in the home loans segment is the new loan rate scheme offered by State Bank of India. Let us consider the factors involved in this new interest scheme and its implications.

Last week SBI slashed its home loan floating rates to 8 per cent, irrespective of which loan bracket the applicant opts for. Prior to this new offer, the rates ranged from 8.5 per cent to 11 per cent, matched for different loan brackets.

Till April 30, 2009, this happy home loan scheme allows the person who takes a loan in this period to freeze the 8 per cent interest rate for one year.

First-time home buyers will be tempted to buy a house right now as the property prices have also dipped. Such a move from SBI could prompt them to procure a home loan and buy a house right away.

Normally such an offer would have been a brilliant deal for a home loan seeker, but with job losses being the order of the day and media hype about recession looming large, loan takers are sceptical about entering new financial commitments and instead wish to save as much as possible.

Even otherwise, first-time home buyers would still bide time as they expect property prices to dip further in a few months and don't mind the wait to clinch a good property deal.

What about a loan shift? Should existing home loan borrowers shift to this apparently attractive loan rate scheme?

To understand how relevant it is for a new home loan customer and an existing home loan borrower who wishes to transfer his home loan to SBI, let us first consider the significance of these savings over time.

Let us explore the situation to see if the offer is indeed attractive, like it seems upfront.

Let us consider an example to understand this better. Banks will provide an amortization table, which will help you calculate the costs involved.

SBI Home Loan offer: Rs 30 lakh (Rs 3 million) for 20 years at 8 per cent interest rate frozen for the first year and then follows a floating home loan rate of 10.25 per cent.

For the first year at a frozen rate of 8 per cent the money outflow on the loan : Rs 3 lakh (Rs 300,000).

After one year when the interest rate is changed to the current floating rate of 10.25 per cent: Rs 66.8 lakh (Rs 6.68 million).

Total money outflow over 20 years + Processing fee Nil = Rs 69.8 lakh (Rs 9.98 million).

Total Interest paid out for the loan: 39.8 lakh (Rs 3.98 million).

Bank X: Interest rate of 9.75 per cent for the same loan amount of Rs 30 lakh and a tenure of 20 years and a processing fee of 1 per cent of the loan amount, which is Rs 30,000.

Total money outflow over 20 years = 68.3 lakh (Rs 6.83 million) + 1 per cent processing fee (Rs 30,000) = 68.6 lakh (Rs 6.86 million).

Total interest paid out for the loan = 38.3 lakh (Rs 3.83 million).

So opting for the Bank X will actually offer you a saving of Rs 1.2 lakh (Rs 120,000), even after including the processing fee!

This example makes it clear that the interest rate scheme where 8 per cent is frozen for one year, may not actually be as profitable as it appears upfront.

In fact, you might save more opting for a home loan, which is a little bit higher than the current 8 per cent happy home loan scheme offered.

Also, if across all banks interest rates fall further as is the expected trend, one has to think over this offer carefully before opting for it.

Will there be better offers after a year on both the property prices and home loan interest rates that you might lose out on by taking up this offer? These and more questions that may arise need to be clarified before considering such teaser loan offers that more banks are likely to line up soon.

Abitha Deepak is Head of Content & Research at BankBazaar.com

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source: http://www.rediff.com/money/2009/feb/13perfin-sbi-8-percent-home-loan-rate-lure.htm