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New Changes for SBI Customers? Research Team | Posted On Saturday, January 04,2020, 05:59 PM

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New Changes for SBI Customers?



Constant improvement is always the top priority of any customer-centric organization. SBI has come up with certain measures to ensure a better experience and added security to its customers. So, if you are an SBI customer, take note of the following changes that come into practice from January 1st, 2020.

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New Changes for SBI Customers?

1. Magnetic Stripe Cards to be Replaced with EMV Chip Cards

The previously used ATM cum debit magnetic stripe cards; would be dysfunctional from January 1st 2020. They are supposed to be replaced with EMV chip cards. EMV chips cards are far more secure than magnetic stripe cards.SBI has requested all its customers to upgrade their existing ATM cards to EMV chip-based cards.

Now, why are EMV chip cards more secure? In EMV chip cards, information stored on the card is encrypted uniquely each time you access the card. Whereas, in the case of magnetic stripe cards, data is stored statically. This makes it more prone to theft and fraud. The process of card skimming does not work on EMV chip cards. Skimming is the process of retrieving data stored on a magnetic stripe card using a device called skimmer during ATM transactions. Therefore, frauds occurring on card-based transactions can be controlled to a great extent using EMV chip cards.

See Also: What is a Savings Bank Account?

2. OTP Based Cash Withdrawal

SBI has introduced a new facility for cash withdrawals between 8 PM to 8 AM, from SBI ATM machines. That is, when an SBI customer wants to withdraw cash of more than Rs 10,000, an OTP (one-time-password) will be sent to the registered mobile number of the customer (number registered with the bank). The customer is required to enter this OTP in the ATM machine after entering the amount to be withdrawn. Only once the OTP generated is verified, cash can be withdrawn. This is additional security for cash withdrawals.

This is not applicable to the ATM machines of other banks.

This method was implemented by Canara Bank in August 2019. It was the first time a bank in India had facilitated OTP based ATM withdrawals. It has proven to reduce ATM frauds to an extent.

The SBI Chairman has made a statement that they aim to achieve a debit card-less country. They are looking forward to capitalizing on digital payments. They have their own digital banking platform named "YONO". It provides a number of facilities like booking tickets for buses, trains, bill payments and so on. You can also use YONO to withdraw cash from ATM machines.

See Also: Small and Payment Banks for Financial Inclusion

3. SBI Home Loans to Become Cheaper

SBI reduced External Benchmark Rate (EBR) by 25 basis points. Earlier the EBR rate was 8.05%, now it is 7.80%. As a result, the interest rates on home loans have come down. The new SBI home loan interest rate will start from 7.9% per annum. Earlier this was 8.15%. Besides home loans, other loans based on EBR points like MSME (micro, small and medium enterprises) loans will also have lower interest rates.

Home loan rates are falling below 8% for the first time in 17 years. The last time home loan rates went below 8% was in 2003. Back in 2003, the interest rate was 7.75% per annum. External benchmark rates are linked to the repo rate. Repo rate is the rate at which RBI lends money to the banks. When RBI cuts on the repo rate, the external benchmark rate also goes down. Interest rates on loans are decided using EBR.

They cannot cut down interest rates below EBR. There will be a spread added above the benchmark rate. Spread is nothing but the amount added to the cost of loans. Banks' profit will depend on interest rate spreads. Spreads for unsecured loans are higher than secured loans like home loans.

See Also: Features of an SB account

How These Changes are Going to Benefit the Customers?

  • With the introduction of EMV chip cards, ATM frauds can be reduced. This will enhance the customer experience.
  • With a better card facility, the financial security of customers is taken care of.
  • OTP based withdrawals are added security to customers.
  • With cheaper loan rates, more people can avail a home loan.

These changes are meant to be implemented from January 1, 2020.

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