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SBI to lower business costs and NPAs
Mumbai: According to A K Purwar, Chairman, The State Bank of India (SBI), the country's largest bank plans to bring down its higher transaction costs and gross non-performing assets (NPA) over the coming years.

"We are trying to bring down transaction costs since it is very high now. In two to three years through our computerisation and networking project we should be globally comparable," said A K Purwar, chairman, said at the bank's annual general meeting in Mumbai on Thursday.

"We have no business to have our gross NPA figure at close to 6 per cent. We should be able to bring it down to about 3 per cent in three years," the chairman told shareholders.

The bank's gross NPA in 2004-05 stood at 5.96 per cent, while net NPA was 2.65 per cent. According to Purwar, the bank aims to bring its net NPA below 1 per cent and maintain it at that level for 4-5 years before achieving nil NPAs.

The Chairman has also committed to maintain the bank's net interest margin (NIM) at 3.5 per cent, while the best global banks have an NIM ranging from 3.0 to 3.5 per cent.

In 2004-05, the bank registered an NIM of 3.39 per cent, up from 3.04 per cent in the previous year.
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IRFC's loans and bonds issue raises Rs1,200 crore
Mumbai: The Indian Railway Finance Corporation (IRFC) has raised Rs1,200 crore from the market. While Rs700 crore have been raised in the form of bank loans, Rs500 crore have been raised through bonds. IRFC is the fund raising arm of the Indian Railways.

While Rs700 crore has been raised from five nationalised banks for a five-year tenor at the rate of 7 per cent, Rs500 crore has been raised through the issuance of bonds with a weighted average cost of 6.18 per cent.

The bonds have been issued to UTI, Citibank, Stanchart, Bank of America, ICICI-Securities and DSP Merrill Lynch.

As for the Rs700-crore loan, IRFC has raised the amount from the United Bank of India, the Syndicate Bank, the Allahabad Bank, the Dena Bank and the State Bank of Hyderabad.

The entire amount will be used to fund the rolling stock acquisition of the Indian Railways. IRFC is expected to raise Rs3,400 crore for buying assets for the Indian Railways this fiscal.

In fiscal 2004-05, IRFC borrowed a total of Rs2,888 crore out of which offshore borrowings were Rs1,096 crore and domestic borrowings were Rs1,792 crore.

The total borrowings were at a weighted average cost of 6.12 per cent after providing for the foreign exchange risk and a weighted average tenure of over seven years.
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