BoC chief outlines new loan schemes
The Bank of Ceylon Chairman Udayasiri Kariyawasam in an interview
with the Sunday Observer explained about the new loan schemes introduced
by the bank to mark its 67th anniversary. Here are excerpts of the
interview
by a special correspondent

Udayasiri Kariyawasam |
The Bank of Ceylon has just celebrated its 67th anniversary, which
was backed by, I may call a huge advertisement blitz. What were you
trying to tell the people?
Our intention was to emphasize our resolve to serve the people and
the nation with renewed vim and vigour, as the Bankers to the Nation.
You might remember that last year during our '66th Anniversary' we
declared the year for customer care and backed it by introducing
'Customer Care Assistants at all branches. We proved ourselves to be a
caring and sharing bank, which has the interest of the customers at
heart; we projected ourselves as a worthy partner in the progress of our
customers.
In this 67th year we are projecting ourselves as a bank capable of
proving tailor-made services, new and innovative products backed by
years of experience and expertise, state of the art technology and
global reach.
You earlier mentioned state of the art technology and global reach.
Could you elaborate? Largest network
We are the Bank with the largest network of branches, throughout the
country with 306 branches and 49 extension offices; We are the biggest
bank in Sri Lanka with 5.9 million customer accounts and total assets
worth over Rs. 329 Billion.
We have overseas branches in London, Chennai and Male also a
worldwide network of 1,200 correspondent banks in 115 countries.
Accordingly our presence is truly International and our reach is
extensively global. Further, 221 branches and 35 extension offices have
been brought under an on-line, real-time computerised network, which is
augmented by an ATM network of 160 ATMs.
We have our own internet i.e BoC-iNet, connected to the internet, BoC
customers enjoy 'Any Time Money' through ATMs and 'Any Branch My Branch'
facility through the on-line network.
Our retail Banking, Trade Finance and Treasury Operations are backed
by three novel interacting Software Systems (ICBS, Bank Trade and ITMS)
and we are now in a position to meet different dimensions of customer
requirements very effectively and efficiently.
We have negated the implied somewhat negative policy of the Sinhala
adage 'Colombata Kiri Gamata Kekiri', as far as our reach is concerned.
We could proudly say that with the Bank of Ceylon it is 'Colombatath
Kiri, Gamatath Ema Kirimai'.
We have breached the geographical divides to enable a farmer from
Medawachchiya to enjoy the same banking facilities that a planter in
Colombo enjoys.
We are ready to market our network capability. A number of firms,
companies including banks have approached us for mutual working
arrangements through which they expect to serve their customers through
our branch network. We are in the process of finalising arrangements,
including pricing and methodologies.
Your reach no doubt is great, your delivery channels are vast. What
do you propose to offer the customers in terms of products and services,
which are new? What are the value additions on offer to woo and win
customers?
Yes, I can make special mention of the package of loans, which we
have introduced to coincide with our 67th anniversary celebrations.
Specialty is that it comes in the form of a package of facilities,
something similar to an all under one umbrella, one-stop-shop facility.
It is a Credit Package consisting of a Housing Loan Scheme, Personal
Loan Scheme, Boc Credit Cards and Lease Financing Schemes - a formidable
combination, which will cater for the specific and special needs of
customers.
You mentioned about specific and special needs of customers. Will
you elaborate?
Yes, housing could be the specific need and landscaping could be the
special component. In the same way housing could be the specific need
and top up facility to re-use the amounts settled to go for a home
theatre system could be the special addition, even a vehicle could be
the special requirement.
The Special Housing Loan Scheme, is available in our branches.
On-line applications will be a reality very soon. This scheme meets all
housing needs.
Eligibility requirements
How about the eligibility requirements, the quantum and other terms
and conditions? Professionals, permanent Government/statutory boards and
private sector employees, self-employed persons, farmers and cultivators
are eligible to seek facilities under this scheme. House builders of
course should be limited liability companies.
It need not be stressed that repayment capacity is a matter of
paramount importance in raising a loan. The prospective borrowers should
have an adequate income, may be wages and emoluments, as well as fixed
or seasonal income.
As far as the quantum is concerned a range between Rs. 1 million to
Rs. 25 million is on offer. At the lower end of the quantum bucket Rs. 1
million and Rs. 2 million are available for furnishing and landscaping
and interior decoration. A tidy sum of Rs. 10 million is on offer to buy
a plot of land. At the upper end of the bucket, Rs. 25 million is
available to purchase land and construct a house.
The rate of advance revolves around a percentage-based table
connected to the market price, BOQ and estimates. For example 90% of the
BOQ value is the rate applicable to house constructions. One of the main
concerns of a borrower is the rate of interest. The basic rate of
interest attached to the loan scheme is 12.5% per annum i.e. just around
1% per month.
It is very competitive, and comfortable. The rate of interest is
linked to the quantum of the loan and a great deal of flexibility, to be
exercised by the borrower, has also been introduced to the rates by
connecting it to the AWPLR (average weighted prime lending rate). The
borrower therefore enjoys the liberty of choosing a convenient rate from
three categories i.e. quarterly, annual or three-year rate to match his
market expectations.
Long repayment period
Naturally a borrower will aim for a long repayment period, which will
lower his periodic loan commitments. Where does this new loan scheme
figure with regard to this vital component of a loan?
A long repayment period, extending up to 25 years is available. The
customer also could opt for grace periods and repayment holidays. Only
the interest due on the loan will be recovered during the grace
period/repayment holidays. Here again flexibility has been introduced by
providing grace periods/repayment holidays to the tune of six years. The
borrower has the option to enjoy this concession in three intervals to
match his/her cash flow.
The house property for which the loan is raised would serve as the
collateral for the facility. The borrower may offer an alternative
property as security when confronted with a problem relating to defects
in the title of the land.
The Mortgage Protection Assurance cover has been made compulsory
under securities to free the family of the borrower from the burden of
repayment, which might befall them in the event of the untimely death of
the borrower. The scheme stretches itself even to cover the insurance
premium payable on the Protection Cover. It is comprehensive.
Many complaints have been raised by borrowers regarding the time
taken, even exceeding not months but years for the processing of loans
and final disbursement. Will the customers face the same dilemma under
this loan scheme?
We have taken several steps to eliminate delays and grant loans as
expeditiously as possible. We have simplified the loan application;
centralised housing loan units have been established at Provincial
level.
A clear set of instructions and information, as to the documents to
be submitted along with the loan application will be issued to the
borrower. Our expectation is to disburse the loan within seven days.
Borrowers' cooperation by way of submitting all documents is vitally
important to achieve success in our seven-day disbursement plan.
Personal loan scheme
Can you outline the benefits of the Personal Loan Scheme and the
Credit Package? The Personal Loan Scheme has been formulated focusing on
the credit needs of the public and private sector employees. The basic
eligibility criteria are:-
Age group 18 to 55 years with a clear DRU and CRIB records
Minimum take-home pay of Rs. 15,000.00 (monthly)
Permanent Public (Govt./Statutory Boards) and Private sector (listed
companies/institutions) employment.
Even employees on a contract basis drawing a monthly salary of Rs.
50,000 are also eligible. A loan may be raised for any legally
acceptable venture or purpose.
As mentioned by you this scheme specially focuses on middle to medium
income earners, who expect the generous support of the lending
institutions in meeting, their credit needs. How generous is your bank
in this respect?
This scheme has many new features, which no doubt will add the
comfort and convenience to the borrowers. Let me start with the quantum.
A minimum Rs. 100,000 and maximum Rs. 2 million are on offer subject to
the condition that the quantum is not more than 10 times the borrower's
gross salary. We have been very practical in arriving at the repayment
capacity.
The Repayment capacity and the quantum of the loan in turn may be
boosted by the addition of proven additional income or the salary of the
spouse.
We have been very progressive and taken a bold step to minimise the
security requirements under this loan scheme. Security is limited to an
undertaking given by the employer to remit the salary or part of the
salary to a designated branch.
Competitive rate
The Repayment period runs up to five years and repayment could be
either fixed or equated at the option of the borrower.
It appears that security has been lowered to the extent of, I may
call, a piece of paper. Is there any more value additions?
Yes! There are many more to come. With the aim of expediting
processing and arriving at a competitive rate of interest, a score card
system has been annexed to the loan scheme. The rate of interest will be
decided based on the scoring. A rating at grade 1 and 2 will entitle the
borrower for a rate of 16% p.a. and a rating at grade 3 and 4 will earn
a rate of 18% p.a.
No processing charges, no early settlement fees will be recovered
from the borrowers one of the special features is the option given to
the borrower to top up the amounts repaid thereby converting the loan to
a revolving facility. Also options are available to enhance the loan
amount in tandem with salary increases. The loan amount could also be
increased to the tune of Rs. 5 million, if backed by a mortgage over
property. Even residual amount of an existing mortgage could be used for
this purpose.
Have you taken any steps to eliminate bottlenecks and minimise
delays.
A new application form has been introduced to minimise the procedure.
Special field Units have been set up at Provincial level to attend to
customer requirements and to liaise between the borrower and his
employer.
Could you please enlighten me on credit cards and leasing facilities
of which you made reference? The BoC acts as an issuer and an acquirer
under the world renowned VISA and Master Card emblems.
Cards come in different categories such as local and international,
credit cards and debit cards, affinity and loyalty cards and offer a
wide variety of options for the customer to choose a card to go hand in
hand with his particular needs.
Social responsibility
But as a piece of social responsibility I may add Credit Cards are
only for convenience, but not for credit. But coupled with little doses
of discipline and responsibility a credit card could become a handy tool
to tide over financial crunches conveniently.
Leasing an alternative mode of financing and provides many benefits
to the lessor and the lessee. The customer is free from the burden of
employing capital as 100% finance is available and asset acquisition has
been made very easy. Lease finance is available for plant and machinery,
office equipment, vehicles and professional equipment. The repayment
period is generally linked to the economic lifespan of the asset, but
may not exceed five years.
You may observe that any one of the facilities so far described by me
could be effectively used either singularly or in plural as a
combination by a businessman or professional focused on success and
development.
The BoC has opened its gates of financing wide and invites the
businessmen, the professionals and others to make the best use of it.
In fact you have opened the flood gates of credit finance widely.
Won't repayment be a problem for those who take a dip into credit
financing?
You might remember, I mentioned about a dose of discipline and
responsibility. 'Deserve before you desire' should be the key phrase in
credit financing. All what matters is Repayment Capacity; it's the
decisive factor. We have defined the segment of the market, enjoying a
steady income in focus when we formulated these schemes.
That does not mean we do not cater to the other segments of the
customers. True to our motto 'Bankers to the Nation' we have a
repertoire of credit products to cater to the specific requirements of
the customers in different segments of the market. |