SBI bets on retail banking

By Our Special Correspondent

CHENNAI, FEB. 16. With softening of interest rates, State Bank of India (SBI) has redrawn its gameplan to give increased focus on retail banking even while looking for opportunities to step up income from miscellaneous businesses. ``Retail banking is our biggest thrust area,'' declared Mr. Janki Ballabh, Chairman of the bank, at a press conference here today.

From around Rs. 2,000 crores in 1998-99, SBI's retail banking portfolio had doubled in the next year. According to him, the current year would end with a further 50 per cent jump. A major component of its retail banking business was housing loans. Mr. Ballabh said by March this year, the housing loan portion of retail banking would be around Rs. 2,500 crores.

Asked about non-interest income, Mr. Ballabh said the bank's income from miscellaneous business ``is among the highest'' in the industry. Nevertheless, he admitted that the rate of growth of miscellaneous income ``is slower than what we expected''. The Chairman said SBI was keen on doubling the income from this source. This, however, required a big jump in volume. This was precisely where technology would come in handy to facilitate ``creation of capacity to handle several times the existing volumes,'' he said.

Not surprisingly, the country's premier bank had laid much store by technology up-gradation. In this context, he referred to the bank's efforts in inter-linking ATMs . By year-end, nearly 300 ATMs would have been inter-linked, he said. A pilot project, currently on, allowed customers to access about a dozen NRI branches via Internet. The technology plan, involving an outlay of Rs. 500-700 crores would see almost all the 2,500 branches of the bank networked within the next three years.

To a question, the Chairman clarified that the bank's thrust on infrastructure funding still continued. He admitted that there were delays in disbursals owing primarily to problems related to financial closure of projects. He, however, expressed optimism that disbursals would start soon. The bank's infrastructure portfolio was around Rs. 5,000 crores. By next month, another Rs. 5,000 crores would be added to this, he said.

On the softening interest rates, Mr. Ballabh said, ``It is a worldwide phenomenon,'' and added that the ``market is responding on a day-to-day basis.'' The drop in yields on gilts over the last one month, the floatation of commercial paper at reduced rates by corporates and the dip in coupon rate on bonds by companies had all clearly indicated the direction interest rates were heading. While many banks had kept the PLRs (prime lending rates) unchanged, he pointed out that some banks were already lending at sub-PLR. (Later in the day, the Reserve Bank of India announced a cut in the Bank Rate and cash reserve ratio by 0.5 percentage each.)

Turning to credit cards, the Chairman said with six lakh cardholders, SBI was number three at the moment.

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