The country's largest lender, State Bank of India (SBI), is stepping up investments in technology as a way to bring down the cost it incurs in opening and operating accounts in rural and semi-urban areas as part of its financial inclusion efforts.
A number of zero-balance accounts have been opened which are adding to costs even though they are not significant deposits, said a senior bank official while explaining the need for additional spend on technology. “We are opening a whole lot of free savings bank accounts where the actual balance is not as much as the normal savings bank account,” SBI deputy managing director PK Malhotra told reporters on the sidelines of ‘Infocom 2013’.
Malhotra said the bank was looking to increase its IT spend by 10% during the current fiscal compared to the R900 crore spent last year. “A lot of initiatives are being taken to bring down the cost. We are trying to put in an automated technology platform with focus on financial inclusion accounts which are mobilised by business correspondents. By developing the necessary back-end system, we are trying to take out manual intervention and slash costs,” Malhotra added.
SBI is also trying to stem a decline in its current account and savings accounts deposits (CASA), which fell to 43.58% at the end of September 30 this year, compared to 44.95% in the corresponding period last year.
Malhotra explained that about 34% of the new savings bank accounts opened by the bank this year were through business correspondents and this was putting the banks's CASA ratio under pressure.
Meantime, on the lending side, SBI is seeing a strong jump in agricultural lending because of a large number of customers seeking credit using gold as collateral. “We expect credit flow to the agri sector to grow 20% in FY14," Malhotra said, confirming the bank's gold lo-an portfolio has seen a 70% rise to R30,000 crore. “But we are not pushing this product separately as we do not want to be recognised as a gold loan company.”
SBI lauds RBI’s proposal on ‘systemically important’ banks
SBI on Thursday welcomed RBI’s proposal to introduce a separate category of banks regarded as systemically important, saying it’ll make the banking system more secure. "The issue of 'too big to fail' came up during stressed times and it is good thing RBI is looking at such steps," said SBI deputy MD PK Malhotra. Domestic brokerage Motilal Oswal