SBH designs recurring-term deposit scheme

In what it claims to be a first-of-its-kind from the Indian banking industry, the State Bank of Hyderabad (SBH) is thinking about launching a new product, which will combine the features of recurring deposit (RD) and term deposit schemes.

“The idea is to freeze the interest rate at the time of entry. In the case of a fall in interest rates, it will not impact the customer. So far, nobody (bank) has thought of it (concept),” SBH managing director M Bhagavantha Rao told Business Standard.

Under the proposed scheme, the period – six, nine and 12 months – will be chosen by the customer. At the end of that period, and depending on the requirement of the customer, it could be turned into a fixed deposit from anywhere between one and 10 years.

“We are awaiting regulatory approvals from the Reserve Bank of India (RBI). Also, we have to rework on our core banking system to support this product. We expect the whole process to complete in two to three months from now,” he said.

Of its total 1,475 branches, the bank currently has 921 branches in Andhra Pradesh and 525 branches spread across Karnataka and Maharashtra.

“We are now trying to branch out into other locations, including coastal Andhra. Overall, we are planning to open 175 branches this year, including 60 to take the total number of branches in that area to 200. Also, the branch network in Andhra Pradesh will reach 1,000 this year,” Rao said.

According to him, the bank was planning to hire 2,200 employees during the current financial year. “We would be adding 1,300 probationary officers by June. About 900 clerical staff would join later in the year by December-January,” he added.