SBI scales up core banking linkage for Basel II

State Bank of India (SBI) plans to cover nearly 85 per cent of its business under its core banking solution by end of March 2006. The planned quantum jump in coverage of branches under core banking is a step towards adopting Basel-II prudential norms.

SBI will add 1,000 more branches to the core banking network by March 2005 and keep scaling up branch connectivity to ensure 75 to 85 per cent of business transactions are covered by March 2006, SBI deputy managing director (IT), R N Ramanathan, said on the sidelines of a technology summit here today.

SBI has only a few hundred of its branches on the core banking platform. It has 9,071 branches, which represents about 13.5 per cent of the bank branches in India.

The bank is also technologically integrating its eight associate banks and will also cover the associates' 4,599 branches with its core banking solution.

The country's largest bank completed computerisation of all the branches of the SBI group in January 2004 and it plans to hasten up the networking of its branches in urban and semi-urban areas so that 85 per cent of its business is processed real-time.

About 45 per cent of its branches are in rural areas, 27 per cent in semi-urban areas, 17 per cent in urban areas and 11 per cent in metropolitan areas.

Ramanathan said banks need to enhance their information technology infrastructure to be able to meet Basel-II norms.

A centralised IT infrastructure, customised software solutions, personnel training and seamless integration of multi-channel strategies are the imperatives for management of credit, market and operations risks.

The Reserve Bank of India too is monitoring the implementation of technology strategies by banks in the run-up to the implementation of Basel-II norms.

RBI chief general manager R Gandhi said the central bank would also act as an advisor to banks for adoption of technology.

Gandhi said Basel-II has advanced the urgency for banks to put in place automation systems and build the basic technology foundations to face the challenges of Basel-II.