SBI to strengthen low-cost credit delivery model

While payments banks are not a threat to the existing universal banks, State Bank of India (SBI) will strengthen its low cost credit delivery model in the wake of the rural outreach of the upcoming entities.

"The kind of remittance services that the payments banks will offer, universal banks already have that in place. Moreover, the payments bank will not be able to provide any credit history to the borrowers. The only way they have an advantage is their access to remote and inaccessible parts due to lower cost of operations. SBI is also coming up with a low-cost model to reach the unbanked areas," Chairman Arundhati Bhattacharya said.

At present, the bank has about 56,000 banking correspondents across India. Recently, the Reserve Bank of India (RBI) gave an in-principle nod to 11 applicants for setting up payment banks. The objectives of setting up of payments banks will be to further financial inclusion by providing small savings accounts and payments/remittance services to migrant labour workforce, low-income households, small businesses and other unorganised sector entities.

This apart, on the issue of teaser home loans, which carried low interest rate in the initial phase, Bhattacharya said reintroducing the scheme was a suggestion and the bank has not made any formal application to RBI.

On Thursday, at the SBI Banking and Economic Conclave, Bhattacharya had raised the point of floating teaser interest rate schemes to RBI Governor Raghuram Rajan.

On the issue of credit offtake, Bhattacharya said, sunrise sectors like defence provided opportunities for partnership.

"Defence is a sunrise sector, and countries have changed their defence preparedness by indigenising it. It is a an opportunity, and we are keen to see partnership in the sector," she said.

State Bank of India