1. SBI developing low-cost model to counter payments banks

SBI developing low-cost model to counter payments banks

Country's largest commercial banking entity State Bank of India (SBI) is now developing a low-cost model to compete with payments banks.

By: | Kolkata | Published: August 21, 2015 5:30 PM
sbi on payment banks

Country’s largest commercial banking entity State Bank of India (SBI) is now developing a low-cost model to compete with payments banks. (Express Photo by Dilip Kagda)

Country’s largest commercial banking entity State Bank of India (SBI) is now developing a low-cost model to compete with payments banks.

“We are working out on a low-cost structure to compete with the payments banks for getting access to people living in the remote areas”, SBI chairman Arundhati Bhattacharya said today.

Bhattacharya said that the only advantage which the payments banks would have over other banks is that they would be able to get access to remote parts of the country.

“There will be payments banks associate sitting in every second home in a village as their operational costs are lower compared to normal banks”, she said at a FICCI meet here.

To counter that, SBI would be opening customer service points (CSPs) in unbanked panchayats and also train youth with minimum education so that they are able to operate a mobile phone, printer and a scanner.

Bhattacharya said that the mobile wallet which SBI had recently launched, Buddy, would also work within the realm of a payments bank.

The biggest disadvantage which the payments banks would have is that they would not be able to give loans as they do not have any history of the credit profile of their customers.

“These payments banks are only for small remittances and cannot give any loans”, she said.

“History of credit is very important”, she added.

  1. N
    Narendra M
    Aug 21, 2015 at 5:17 pm
    (1) It is good that traditional banks like State Bank of India (SBI) have decided to accept challenge of the new generation Payment Banks. Question is whether the new Payment Banks would be able to provide good service at an affordable price to those millions who are out of reach of commercial banks right now? (2) Success of the Payment Banks will depend on their reach and cost/ quality of service. Payment Bank of Department of India Post is most likely to succeed if it uses the existing network of post offices for the new bank. (2) Incidentally, I wish to give just one example. SBI has set up machines called “SWAYAM” for pbook printing. That is good, innovative use of technology. But faulty machines which are not repaired in time make the innovation annoying. One wishes that new Payment Banks will give attention to two aspects (a) the reach and (b) affordability of service.
    Reply
    1. M
      Madhu
      Aug 21, 2015 at 7:31 pm
      Question is why they could not do it earlier ? RBI has done a great thing by injection compeion in the financial services space, now they have to regulate efficiently to avoid any mishaps. Indian consumer will be the beneficiary.
      Reply
      1. D
        Debi Prasad
        Aug 21, 2015 at 9:44 pm
        SBI behaving like a jack of all treads but master of none, its first & foremost priority is to manage NPA.Recover taxpayers money.
        Reply

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