A giant stirs

SBI belatedly sees the virtues of retail

The State Bank of India’s plans for going aggressively retail in its operations should come as no surprise. The bank has been ignoring the growth in this segment to its own detriment. It was but natural that this realisation would dawn on the management of country’s largest commercial bank. Thus far it has lost ground in terms of a retail presence to Citi, HSBC and, most recently, HDFC and ICICI, which have shown redoubtable talent for innovative products aimed at the individual and an array of consumer finance needs. To this extent SBI’s continued emphasis on industrial credit has been misplaced. Not only are these times when big ticket investments are not in evidence, but a widening base of consumers is seeking professional services.

The bank has also been neglectful of the enormous scope new technology offers. It has been slow in building up an online presence. Teller machines, debit cards and Internet banking have been rapidly cutting down transaction costs. SBI shied away from these waters while others boldly waded in. Its alliance with GE for credit cards was a good step, but it did not seem to usher in a change in the organisation’s culture. The five-year plan it has formulated now seeks to achieve an orientation from within. It is proof of the realisation within its top echelons that it is unwise to depend so entirely on the industrial sector and its diminishing opportunities and neglect the potential of the retail sector. In the past year, the bank missed its credit target by 2 per cent. In keeping with this new line of thinking, SBI’s focus will shift from top-rung corporates to middle-order ones. Along with this roughly 40 per cent of the credit target, amounting to Rs 6,000 crore, will go towards retail financing in 2001-02. This is a huge jump from the Rs 2,600 crore it now disburses. Predictably, the key areas will be consumer finance, housing loans and middle corporates. SBI has many strengths. Not least is its phenomenal presence across the length and breadth of the country. Other banks have to work hard at building such a presence. Now all that SBI needs to do is use technology to strengthen its links and become more responsive to the instant needs of a changing marketplace.