State Bank of India (SBI) is hiring 2,000 relationship managers to improve service for its premier customer with overall deposits of Rs 30 lakh and above. Chairman CS Setty talks to Sachin Kumar and Joydeep Ghosh about how the bank is in a permanent reinvention mode. Excerpts:
Is the worst over in terms of deposit mobilisation?
Efforts made by the banking industry seem to be paying off as bank deposits have grown in double digits in December. We, at SBI, would like to compensate the depositors properly, but we will not rely only on the rates. We have carried out a couple of customer focused enhancements, especially on the service quality at the counters which is an added element to the great trust in the SBI brand. In terms of products, we have launched the Har Ghar Lakhpati — a product focused at channelising savings through recurring deposits that has been a great success. We have already opened 630,000 accounts through this scheme. We want to inculcate savings habit in our customers. At the same time, there are a large number of premier banking clients who have overall deposits of Rs 30 lakh and above with us. We want to give them premium quality services through our relationship managers. We are deploying around 2,000 people for this specialised role.
Is there any innovation that SBI is planning to attract more depositors?
The product differentiation is not much in the deposits, except for the tenures and the relative rates of interest. What we are trying is to provide excellent quality customer service across the channels. To properly compensate our valued customers, we brought 444 days deposits for which we are paying 7.25% rate of interest annually. Our effort is to keep the customer service in the centre of all our decision- making process. We are seeing significant volumes in these segments.
After the RBI said that the growth in the personal loan has moderated, will you grow this book more aggressively?
We remain committed to prudent lending practices. In terms of acceleration, unsecured personal loan growth rate cannot be sustained at the rate at which it was growing previously. From here, both for the industry and for banks like us, there will only be forward movement. We have around 20 million corporate salary package accounts, and we have covered only 28% of them, in terms of extending personal loans. We have a very big runway to cover still.
Have deposit rates peaked?
Interest rates appear to have peaked, and if monetary transmission has to happen, it cannot be only through loan repricing. Sooner or later, deposits will also get repriced. The transmission will happen both on the asset side as well as liabilities. The time lag would be there because the loans immediately get repriced, especially if they are linked to the repo rate.
What are the digital innovations happening at the bank? When is the Yono 2.0 expected?
One, we are trying that our digitial customer journeys are much more seamless. We have done that in Yono 1.0 also, which transformed customer journeys and improved customer experience.
Number two, we are working on every product from a Digital First perspective. Whether it is account opening or contribution, personal finance management or other aspects, everything should happen digitally.
Three, you would be seeing as part of Yono 2.0 , the marketing technology stack (martech). Personalisation and hyper personalisation are key elements of this martech. Currently, we are providing personal loans, based on analytical leads. But we are going to go a little ahead – provide offers while you are making the transaction itself. Like, while going to buy a laptop, there will an instant offer that will be customised for the customer. We are also working on Customer Lifecycle Management from the time the account is opened to various phases of our engagement with the customer.
We are also trying to integrate branch, mobile, internet and feet – on- street in Yono 2.0, for an omni-channel experience. So, if you started opening an account from the branch, but could not complete it, we will ensure that it can be done by continuing the journey through the internet or mobile app.
Due to significant architectural changes and extensive testing, there has been a delay in the launch. The beta version will now be launched in June. In the meantime, YONO 1.0 continues to be an important platform. we open approximately 65,000 accounts on a daily basis, and 90% of them are being opened through Yono 1.0. 10% are being opened through other means.
The banking sector has gone through a purple patch, but things look challenging, going forward. Even the FSR has pointed this out. How do you see things?
Banking is a cyclical industry and we are at the most benevolent asset quality cycles. All of us are making efforts to see that how much we can extend this cycle.
We are trying to improve our underwriting standards, trying to improve the collection mechanisms, as well as post sanction monitoring . We are using data extensively. Underwriting improvement through the use of data, coupled with standard collections is one of the main reasons for being able to maintain asset quality. All this will help in delaying the potential turn of the cycle.
Of course, any cycle is also a function of macros, and they have been doing well. The growth rate of 6.5 to 7% will ensure that people and corporates have adequate potential to borrow and repay the loans.
But if the cycle reversal does hit, how will we manage?
Both banks as well as corporates today are in a much better position. Corporate balance sheets are cleaner, and they are more responsible in terms of their borrowing.
The banking sector continues to face tight liquidity. What will be the impact on the system?
There is a good amount of liquidity support from the RBI, even though the system liquidity is still in deficit. But what we have seen is that RBI is committed to make the liquidity available continuously, and whenever it is required. It is also resulting in the market borrowing cost coming down.
How many rate cuts do you expect?
Our house view is that the rate cut cycle is going to be shallow, which means that maybe 75 bps rate cut in the calendar year.
One of your predecessors had said that being the chairman of SBI is like making the elephant dance. What has been your experience?
The biggest advantage for SBI is that we work continuously towards reimagining ourselves and stay relevant. I believe SBI is more of a trapeze artist – flexible to adapt to changes and reliable. We have a highly qualified workforce. This institution has the ability to reinvent itself, to keep itself relevant.
Is there a need to rethink remuneration of public sector bank employees?
Majority of the sector bank staff are getting market equivalent remuneration. PSBs also offer a variety of roles during the career of an individual which are challenging as well as fulfilling.