‘Home loans won’t remain cheap for long’

SBI Chief OP Bhatt Says Bank Is Open To Acquisitions, To Recruit 11,000 Staff This Year OP BHATT, chairman of SBI, hinted that home loans could become dearer in the coming years. He spoke on the transformation of SBI at a seminar in the Indian School of Business, and later told ETthat the bank was open to acquisitions and would hire 11,000 employees this fiscal.  There is a perception that your customers may not gain in the long run from the special home loan packages. Besides, there are fears you could end up with more distressed assets.  We are the largest home loan providers and disbursements doubled between April and July this year compared with the same period last year. But there are no gimmicks in our special home loan packages. We look at the borrower's income and ability to repay. It is incorrect to say this could lead to a situation similar  to the US subprime mess. We are strict on due diligence and have not relaxed the eligibility criteria. We have been vigilant in our appraisals as well.  Would you review the special home loan package that offers cheaper interest in the initial years?  Cheaper loans cannot continue indefinitely. But when the economy was in distress, we did our best to cut interest rate on home loans. For instance, in our "SBI My Home Campaign", the interest rate for the first year is 8%, and for the next two years is 8.5-9% depending on the size of the loan. The stimulus package to boost home loans was to expire in June this year. But we had to look at those who  had not made up their minds and were  undecided on their plots.  Would you raise more capital?  Our CAR is 14.25%, inclusive of tier-I capital of 9.38%. We have enough capital for our business growth and are certainly profitable. We need capital for other businesses such as insurance and rural operations. Besides, funds may be needed if we acquire a bank or for floating new companies.  Are you looking at any acquisitions now?  We are not looking at any acquisitions. But we are open to opportunities that come our way and want to have capital ready.  Have you set any target for growth in current and savings account deposits? What about hiring plans of SBI?  We will continue to maintain a CASA growth of 38%. We plan to hire 11,000 employees afresh this fiscal.  Has there been a change in the way you do your business after the global meltdown?  Within India, there has been no change, except that there is a slowdown. We do not feel one particular business is riskier than another.  When do you see associate banks such as State Bank of Indore merging with SBI?  The process is a fairly long one, as some approvals are required from the regulator and the government. OP Bhatt