This is for the first time that a state-run bank is creating a SBU for consumer financing, the traditional domain of a few foreign banks and non-banking finance companies. This also signifies a strategic shift in the SBI's business focus. The slack demand for corporate credit has prompted the bank to target personal financing as a growth area.

The bank has chalked out a three-pronged strategy to combat the attack on its spreads, which came down from 4.01 per cent to 3.57 per cent in March 1998. The three prongs of the strategy are launch of new products, creation of new SBUs and increase in turnover.

"The existing SBUs are the corporate accounts group (CAG),leasing, national banking and foreign operations. For this year, the P-segment will substantially contribute to the bank's balance sheet," Verma said. The search for new business areas has been triggered by the sharp decline in the bank's net interest spread. "The spread will fall further. We will have to concentrate on new products to protect our bottomline," Verma said.

It had launched its cash management products (CMP) and bullion counter last year. This year the focus will be on new products like credit card and foray in the eqity business. It has also firmed up plans to enter the insurance business. "My objective is to double the balance sheet size in four years.If the GDP grows by seven per cent and industrial production shows 11 per cent growth, it is possible (to double the balance sheet in four years)," Verma said. Despite a sagging industrial growth, the bank registered about 15 per cent growth in its balance sheet size in 1997-98 -- from Rs 1.56 lakh crore to Rs 1.80 lakh crore. "I am confidentof the growth. We will be able to sustain the profit growth," Verma said.