The SBI plans to charge fees for offering the at-par facility for encashment of corporate dividend and interest warrants. The bank, which had hiked service charges across the board by 100 per cent last year, is planning to raise them again to compensate for the shrinkage in interest income.

Bank of India, among others, is also planning to restructure service charges again after raising them by 100-300 per cent recently.

"A whole lot of services which were offered free to corporates so far will be charged now. There is no free lunch any more," a senior SBI executive told The Financial Express. According to him, the bank will have a close look at all facilities that were traditionally offered free tocorporates and levy charges on them. For instance, no corporate entity will get the at-par facility for dividend warrants free now. "With the PLR pegged at 13 per cent, the upper limit of the lending rate band is fixed at 16.5 per cent -- which was the PLR in October 1996.

Over the last one year, the industry's spread has shrunk by about 1.5 per cent. We will confine the concept of relationship banking only to quality of services and not the cost of services as we have to protect the bottomline of the bank," the SBI executive said.

Bank of India plans to rejig its service charges. "We will finetune them and try to increase fee-based income manifold. For instance, there will be different charges for collection of user's bills and side bills," a BoI source said. The bank is planning to hike service charges on all overseas collection instruments, sources said.

The other possible avenue being explored -- to raise resources -- is securitisation of assets. Bank of India is planning to securitise its entirehousing loan portfolio worth about Rs 300 crore. A series of presentations have been made by investment bankers over the last few days in this regard.

Since the housing loan portfolio primarily comprises staff loans, the quality of assets is top class (though yields are low) and will get a triple-A (AAA) rating. "Once the low-yielding loans are taken off the balance-sheet, fresh funds can be deployed in a more profitable way," sources said.

Banks are meanwhile fiercely undercutting on spreads to grab a chunk of the bullion business. "In three months we cut our spread by over 60 per cent to push business. The overall emphasis is on growth so that we generate business volumes at finer spreads," said a bank chairman.

In the changing interest rate scenario, banks are worried about liability management even as growing non-performing assets (NPAs) are eating into their profits. A host of state-run banks are likely to post higher NPAs in 1997-98.