Physical and digital modes of financial services to co-exist in India: SBI chairman

Khara said SBI has entered into two such partnerships and it is working with some other players as well on the co-lending model.

SBI Chairman Dinesh Kumar Khara on Wednesday said physical and digital modes of financial services delivery models will co-exist in India due to a wide geographical space.

“In India, we serve a variety of customers. We also serve those who are digital savvy and who would not like to have anything physical but on phone clicks. There are also customers who have financial and digital literacy as a major concern.

“So I think its not either/or situation perhaps for a country like India, the digital and physical, both will co- exist, its going to be phygital,” Khara said while speaking at the FIBAC 2021, jointly organised virtually by FICCI and IBA.

On the emergence of the co-lending model in India, he said it is an essential mechanism which was initially meant for establishing connections with the last mile.

“Very often it is talked about that SBI has 65 per cent of its branches in semi-urban and rural areas, so do we still need a co-lending partner.

“I think we still need the co-lending partner for the reason the last mile connect which is there in these partners is that they are operating in a particular geography. It is more like a niche area where they have the adequate information about the borrowers,” Khara said while speaking during session ‘CEO Panel – Resilience & Rebound – Preparing for the journey towards a USD 5 tn economy’.

Khara said SBI has entered into two such partnerships and it is working with some other players as well on the co-lending model.

He said NBFCs and MFIs have reach on the ground and have much more informal information available with them, which is very integral for taking decisions.

“We have already entered into two partnerships. We are engaging with a few more (players) and we have seen that it serves the purpose on the ground,” Khara said.

Axis Bank MD&CEO, Amitabh Chaudhry said there has already been disruption in the payments space with 95 per cent of the transactions on UPI originating on third party payment platforms and not on the banks.

He said the next disruption will take place in the lending space. “The next phase of revolution will take the concept of lending with the introduction of lending service providers (LSPs) who can leverage APIs to connect to the potential borrowers to all possible lenders on open credit network,” Chaudhry said.

A K Goel, Chairman, IBA and MD & CEO, UCO Bank said with digital delivery of banking services, traffic has been reduced from the branches.

“But the major issue is that as on date, 30 per cent of the people are using feature phones,” Goel said.

He said digital lending can be improved either by a co-lending model or with partnership with the fintechs, it will further ease the traffic at bank branches.

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