New Delhi: The public sector giant State Bank of India (SBI), is experiencing a mixed success in the second half of this year. While retail loan segment have picked up after a sluggish first half, the personal loan segment is witnessing a slowdown. The personal loans disbursed by the bank has fallen by 5-10% during the second half.

Sitaramam Komaragiri, Deputy Managing Director and Group Executive, National Banking, State Bank of India said," Though there is a decline, but its not a steep one and is only limited to personal loan segment. Home loans and auto loans are performing fine. SBI personal loans have a delinquency rate of 3-4%."

Deposits of SBI have shown significant promise and the growth in deposits during the same period has been a healthy 25%-26% as compared to last year. SBI is planning to add more services to its kitty very soon.

"In 2008-09 we will start custodial business, general insurance and also set up the SBI Venture Capital Fund. We already have large network and customers, The bank’s pension fund is also likely to be operational within 3-4 months," he added.

The high incidence of assaults by loan recovery agents and the recent activism by various sections of the society against these acts have force the banks to adopt strict measures, since many of the incidents involved borrowers from the sub-prime segment having a small-ticket personal loan. State Bank of India and other banks like HDFC, and CitiBank have tightened their norms for lending small ticket personal loans to the sub-prime segment. The leader in this segment, ICICI Bank has stopped giving small ticket personal loans altogether.

This decline can be attributed partly to the high interest rates prevailing in the market but, a major cause is the banks adopting tough screening measure and lending only after a thorough verification of personal and financial credentials of the borrower. 

State Bank of India offers SBI Saral- Personal Loans in India for various purposes at low interest rates and the interest is charged on a daily reducing balance. The processing fees is between 1-2 percent of the loan amount and there are no hidden costs or administrative charges. The personal loans can be taken from more than 3000 branches across the country. These loans are offered against minimal documentation and are available for repayment tenures up to 48 months. SBI currently charges a floating interest rate of  16 percent per annum (3.25 percent above SBAR) on its Saral Personal Loans.