SBI on target to exceed credit growth, says Purwar

The State Bank of India (SBI) will exceed its credit growth target in fiscal 2004-05, the bank's chairman AK Purwar said today.

SBI's advances have grown by 24 per cent on a year-on-year basis. "There has been growth all round "" retail, infrastructure. We will exceed our loan targets for the year," Purwar said at a press conference held on the implementation of its core banking solution.

There is tremendous growth in the economy and the Reserve Bank of India has a tough balancing act before it in the upcoming mid-term review of the annual policy statement for 2004-05, said the chairman.

"While there is robust growth in non-food credit and the undertone in the economy is very strong, inflation has touched historical levels...Liquidity is very comfortable... It's very difficult to say whether RBI will touch interest rates," said Purwar. He declined to give a short-term view on interest rates.

Till about a month back, the chairman's view had been that interest rates would be stable in the short-term. Meanwhile the financial markets have factored in an interest rate hike of 0.25-0.50 per cent on the repo rate front.

SBI aims to bring 2,000 branches out of its group under the core banking solution by March 2005. By March 2006 the bank aims to bring 90 per cent of its business under it, said the chairman.

"As of today we have connected 250 branches through the core banking network. By March 2006 it is our dream that we bring the entire 14,000 branches of the SBI group under it," said Purwar.

SBI had earlier fallen short of meeting its projected targets in terms of implementation of the core banking solution but is now very optimistic of achieving these ambitious targets. TCS is implementing the Australian software product, FNS across the bank's branches.

The bank aims to bring down the transaction cost by 15 per cent through the core banking solution and "...we will pass some of this to our customers," said Purwar.

SBI spent $ 200 million last year on the core banking project menat to connect all its branches to eachother. "This year we are spending Rs 600-700 crore on the project and the cost is going to come down going forward," he said.