New York: A US government body created to restore confidence of the public in the country’s banking system feels that Indian lender State Bank of India’s Chicago unit has to improve to meet the local credit needs.
The Federal Deposit Insurance Corporation (FDIC) has concluded that SBI’s Chicago branch needs to improve its compliance with Community Reinvestment Act.
The Act is aimed at encouraging insured banks and thrifts to meet local credit needs, including those of low and moderate income neighbourhoods. Moreover, the activities should be consistent with safe and sound operations.
In the list of banks evaluated for compliance, FDIC has given the rating ‘Needs to Improve´ to SBI Chicago, in April 2009, according to the latest data available with the agency.
Out of the 18 banks rated in the Chicago region, the FDIC concluded that only SBI needs to improve its activities in terms of catering to local credit needs, while 15 of them were evaluated as ‘Satisfactory" and two were said to be “Outstanding”.
Since 1990, the government has made it mandatory for the FDIC to publicly disclose the evaluation and rating for each bank or thrift that undergoes a CRA examination.
The FDIC was established in 1933 to restore public confidence in the nation’s banking system.
The Chicago and New York branches are members of the FDIC. Currently, SBI has nine branches in the US.
State Bank of India, is planning to strengthen its presence in countries including the US and the UK which have strong India links.
“Initiatives (are) under way to strengthen business in countries with a strong India linkage like the USA, UK and UAE,” a senior SBI official had said, adding, SBI plans to become a major player for Non-Resident Indians (NRIs).
“The restructuring of the international business is under way to enable new business model,” he had added.
During 2008-09, the SBI international credit portfolio increased by 54% to Rs86,267 crore against Rs56,196 crore in the previous year.
At the same time, the bank last year, along with its subsidiaries and joint ventures abroad, opened nine offices, including full-fledged retail operations in Singapore, last year.
SBI California, the bank’s wholly-owned subsidiary in US, opened its seventh Branch at Bakersfield.