SBI has come out with some aggressive lending schemes, slashing interest rates for new loans. Are volumes your gameplan?
We are operating on several gameplans right now, but yes volume is a very important game for us.
How have you managed to give loans at such low rates?
The global meltdown resulted in a lot of people turning to public sector banks. This resulted in our having an excess of Rs 12 lakh crore at the end of March. We have grown by more than Rs 2.5 lakh crore this March, of which a large chunk has been deposits. In fact, towards the end of the last year (2008-09), the inflow of deposits was as much as Rs 1,000 crore per day. It was around this time that credit started getting stagnant. Yet, we outpaced the industry in credit outtake.
Why has SBI not cut interest rates for existing customers?
When RBI cut rates, the problem was that we couldn’t suddenly change deposit rates from 11 per cent to say 5 per cent, in the same way that we couldn’t lend recklessly. We decided the best way to give benefit to the customers without putting pressure on the balance sheet would be to bring down interest rates of new loans for SMEs, homes and autos. The decision paid off as we have disbursed Rs 1,350 crore worth of home loans in 40 days since we began the scheme in February.
What is your projected growth in this fiscal? And what will be the capital needed for the growth?
In the next five years, we need Rs 60,000 crore to Rs 70,000 crore of capital. Since the government shareholding in SBI cannot go below 55 per cent, there is little chance of raising our tier I capital through equity and even if we do, the minimum amount to be raised would have to be Rs 20,000 crore.
How important is financial inclusion to SBI?
Financial inclusion has always been in our DNA as we are one of the very few banks that are present in some of the smallest villages across India. Yet, I feel a lot needs to be done if we are to be able to include the poorest and the most backward areas into the financial progress of the country. Some of the most backward areas have remained without even the basic banking facilities and it is our aim to reach out to such areas. We have already reached out to 50,000 such villages in the last year through innovations like banking correspondents and we plan to add 50,000 more such villages in this year.
Is the “Chota SIP” scheme of SBI Mutual Fund aimed towards this population?
Yes. We have also urged the government to exempt people from such areas who invest in Chota SIP from having to provide PAN. If the government agrees to the exemption, then we could attract as much as 10 lakh investors in this year itself.