SBI now has 10,000 branches. That?s second largest by branch numbers in the world, after the Industrial and Commercial Bank of China (ICBC), which has a little over 18,000 branches. Or, third in the world, if one counts a quasi-bank like Japan Post, which functions as a savings mobiliser and has over 24,000 branches. Another 2,000 SBI branches, almost all in rural India, are planned over the next two years. This is presumably part of the financial inclusion initiative of the bank?s owner, the Indian government, which wants SBI to have 100,000 branches in another 50 years or so, as the finance minister has reportedly said. If that happens, SBI may be able to boast that it is the bank with the largest network in the whole wide world. That?s very impressive, too. But let?s look behind the branches.
No one in the world banking industry will be very impressed. Greater geographical presence via basic branches?few desks and an SBI logo?in remote parts of the country is not a substitute for real business growth. With assets of $156 billion or thereabouts, SBI remains a midget in comparison with ICBC, which is ranked 17th in the world, with assets of $815 billion. China?s mega-bank also has a huge capital base, after its $21-billion IPO last year, and its potential for business expansion has given it a market capitalisation that now rivals the world?s biggest, better-known banks. Size in terms of the financials, rather than physical presence, is becoming very important in an industry consolidating fast and seeking ever higher efficiency levels. In fact, all the 16 banks bigger than ICBS have assets of a trillion dollars or more. The world?s biggest, UBS, has nearly $2 trillion in assets. Second ranked is Barclays, with over $1.9 trillion. Incidentally, Royal Bank of Scotland (RBS) is ranked fourth, with $1.7 trillion in assets. If either Barclays or RBS merges with ABN Amro, which has assets of $1.3 trillion on its books, the world will see a banking behemoth of unimaginable proportions. This is the global big league. Indian banks will need to get within entry range, as Chinese banks are doing, if they are to survive financial sector globalisation. Reach expansion has its logic and attractions, but it isn?t a sufficient propellant in today?s world of banking.
