The Hindu : SBI to leverage network to become universal bank

Online edition of India's National Newspaper
Wednesday, Sep 10, 2003

Business

Business

SBI to leverage network to become universal bank

By Our Special Correspondent

CHENNAI SEPT. 9. The Asset Reconstruction Company (ARC), jointly floated by SBI, IDBI, ICICI and HDFC, has identified 11 accounts for acquisition in the first tranche of NPA (non-performing assets) buying. The size of these assets put together will be around Rs. 6000 crores.

Addressing a press conference here today to mark the computerisation of all branches in Chennai Circle and also to launch a couple of new products, A. K. Purwar, Chairman of SBI, reckoned that the ARC would play an `important' role in the resolution of NPAs.

Fielding a range of questions, Mr. Purwar said SBI was doing well so far this year with the retail business showing a growth of 40 per cent plus. Nonetheless, he said the overall credit growth was not up to the mark. To a query, he said the retail asset portfolio of the bank was around 18 per cent. The proposal was to take this up to 30 per cent. He, however, was quick to add that he "does not propose to sacrifice other segments in the bargain".

Responding to questions on RIBs (Resurgent India Bonds), which are coming up for service soon, Mr. Purwar was confident that the two new products that the SBI had proposed during road shows abroad would be attractive enough for NRIs (non-resident Indians) to invest. He was hopeful that SBI would retain at least 35 per cent of the RIB money with it through subscription to these new products. In his view, the interest rate obtaining in India was far higher to that prevailing in the U.S. and Europe.

The LIBOR plus dollar rate was around one per cent. The rupee rate was, however, hovering around 4.5 per cent, he said. To queries on effecting a cut in deposit and lending rates, Mr. Purwar was unwilling to hazard any guess on the thinking of the bank at this point in time. He said the bank was "evaluating the situation".

Nonetheless, he pointed to the RBI signals and actions on the ground by some banks vis-a-vis deposit rates.

On the NPA, Mr. Purwar said there was no clear-cut policy. Yet, the bank, he said, was pining to reduce the net NPA to 2 per cent by March 2005.

The SBI Chairman said, "We are converting ourselves into a universal bank, leveraging the distribution network". To a question on associate banks of SBI, Mr. Purwar said they were all loosely integrated through one technology platform and similar business process. "In the coming days, there will be much more integration and co-ordination," he said. Questioned on the possibility of swapping branches between SBI and its associates, he said, "we have not looked at it now. We may perhaps do it at the right time as it comes along".

Earlier in his opening remark, Mr. Purwar said all the 590 branches had been fully computerised. Chennai Circle was the third only to be fully automated besides Bangalore and Chandigarh.

He also launched two new products — State Bank Cash Plus and SBI Credit Khazana. State Bank Cash Plus is a global ATM-cum-debit card, which allows customers to draw cash from Maestro/Cirru branded ATMs across the globe. The card usage is, however, subject to forex regulations.

SBI Credit Khazana is a scheme for customers who have availed themselves of housing loans and regular in serving them. Under the scheme, customers can enjoy lower interest rates and margins for other retail products of the bank.

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