SBI setting up regional processing centre

The State Bank of India (SBI) is in the process of setting up a regional processing centre (RPC) in Mumbai.

This move will make SBI the first public sector bank to set up processing centers. This will also enable the bank to convert its branches into sales offices.

Till now, only private sector banks and foreign banks have been setting up processing centers in the country.

In the public sector, Bank of Baroda is also in the process of setting up RPCs by the year end.

SBI is also in the process of renovating its branches in the urban areas. The plan is to make all branches have the same look and feel.

All branches of the bank "" from retail to specialist branches for SMEs and private banking "" would also have a similar look and feel.

These processing centres do all the back-office operations of branches such as account opening work, fixed deposits jobs, all generation of customer materials like cheque books, pin numbers, ATM cards, processing of trade services like letter of credits, bank guarantees, etc.

Private sector banks such as ICICI Bank, HDFC Bank, UTI Bank have been able to go in for massive customer acquisition on the back of these RPCs.

In the first phase, SBI is planning a pilot RPC for its retail deposit products which will cater to the Mumbai center.

Over a period of time this RPC would services four circles including Mumbai, Ahmedabad and Bhopal catering to 600 branches.

In the intial years, the RPCs would cater to only branches in the metros and in the urban areas.

Also it would kick off after the core banking solutions in these branches are set up. The core banking solution will be implemented in 2600 branches across the country.

SBI plans to set up at east four RPCs in North, South, East and West. It also plans to set up different RPCs for retail liability, retail assets, corporates and also for the SME sector. "This would encourage specialisation and standardisation across the country. Also only around 2 per cent of the time is used for sales and service with the remaining going for back-office and administration work. The staff will now get a lot of time for sales and service. Also the branch space can also be put for more productive usage like setting up lockers etc," said sources.

The Mumbai RPC will be staffed by 500. The surplus people at the branches would be relocated to the RPCs or for marketing jobs.

This whole restructuring and Business process re-engineering is also set to contribute by a few hundreds of crore to the bottomline due to cost effectiveness and lots of cost cuttings.

BoB is looking at setting up six RPC after the core banking solutions in the bank kicks off. "There will be one centralised RPC for corporate while the RPCs for retail and SMEs will spread across either region wise or zone wise," said BOB's chief technology officer V Chandrashekhar.

He added, " All the routine and repetitive functions would be taken out of the branches and they will become more marketing oriented. This will also help them in spending more time on the customers."

The bank has gone in for centralisation as much of their services in their back-offices as possible. HDFC Bank has centralised account opening activities including fixed deposits, all generation of customer materials such as cheque books, pin numbers, ATM cards, processing of trade services like letters of credit, bank guarantees.

"Also with telecom and technology we have the ability to centralise the process. We cannot have specialist in each transaction sitting in our branches. This would also need training cells. Also we needed some standardisation across different branches. The group sitting in the CPU is able to turnaround transactions as fast as those sitting in the branches. It also gets in reducing errors as the people are specialised and also reduce risks from a controls point of view. It also reduce costs as everything is centralised, " he said.

The bank has central processing units in four regional centres across the country. HDFC Bank follows a hybrid model of CPUs. For credit cards the bank has only one CPU which is based in Chennai which takes care of all end-to-end credit card needs from applicants to finally sending the card in 12 working days after receipt of the application.

An approval of auto loans now takes only 48 hours and personal loans 72 hours. Swaroop clarifies that this is the time taken for the documentation even as the customer is told upfront on whether he would be eligible for the loan or not. The time taken in processing auto loans was between 5 to 7 days around four years ago.