Competition for deposits but no rate war, says SBI chief C S Setty

SBI is aiming to get 90 per cent of its retail unsecured loans from the digital channels, going forward, Setty said

Competition for deposits among banks is likely to continue for some time, and instead of getting into a rate war to mobilise deposits, they would focus more on improving service quality, said CS Setty, Chairman, State Bank of India (SBI), adding that the bank is aiming to get 90 per cent of its retail unsecured loans through digital channels, going ahead. 

Nevertheless, there will be some tweaking in interest rates in the 1-2-year bucket, which is the most popular, said Setty, speaking at the Global Fintech Fest.

“Most of the banks ...we are not getting into a rate war. We want to attract customers by way of improved service quality and improved access. Everybody is looking at how we can get value out of the existing customers, and also attract new customers by offering better quality services,” Setty said.

 

Meanwhile, SBI has launched a new variant of its retail term deposit scheme ‘Amrit Vrishti’ for 444 days’ tenor, offering 7.25 per cent interest rate to customers.

Setty also highlighted that there is change in asset allocation among customers as some amount of investible surplus is going to other asset classes. Additionally, the increased credit growth and the diversion of savings to other asset classes is putting pressure on the deposit growth of banks, he said.

The banking sector has seen sluggish growth in deposits for some time and credit growth has been outpacing deposit growth, heightening concerns about banks' liquidity management.

Amid this, Reserve Bank of India (RBI) Governor Shaktikanta Das has instructed banks to offer ‘innovative products and services’ and effectively use their branch networks to attract household savings as deposits.

Setty said SBI is comfortable with its credit-deposit (CD) ratio, and is not under any pressure to bring it down.

“We have robust credit growth; we are anticipating a credit growth of 14-16 per cent. In deposits, even if we have 8-10 per cent growth because of a large base, in absolute numbers it will be more than the absolute amount of credit,” Setty added.

Speaking on the revival of private capital expenditure in the economy, Setty said brownfield expansion is being met by corporates with their own cash. This, he said, has been accumulated over a period of time. Once they consume that, the credit drawdowns will start.

“We have sanctioned, approved, and disbursed loans of about Rs 4 trillion. If this is an indication of capital expenditure, then it is a robust one,” he said.

YONO 2.0

Setty underscored that SBI is undertaking a deeper technological transformation with YONO 2.0. The state-owned lender is going beyond tweaking the journey of YONO 1.0 and calling it 2.0.

“YONO 1.0 is robust but what we are looking at is a complete transformation of the app. The app is about 5-6 years old. While the design elements will remain, we are focusing more on stability, scalability, and robustness of applications, which entails deeper technology transformation,” Setty said.

He added that SBI would like to create an omnichannel experience with YONO 2.0.

SBI would launch YONO 2.0 in November in a closed user group, he said. YONO currently has 80 million registered users today. Almost 10 million users log in each day.

Additionally, Setty highlighted that SBI is on a digital transformation journey.

“We are focusing more on technology and technological resilience, which requires you to invest in data architecture and revisit your infrastructure and network,” he said.

“What we are focusing on is essentially customer omnichannel so that branch customers can seamlessly move to YONO and internet banking. This requires absolute, deeper reorchestration of the IT platform, which is what we have undertaken under YONO 2.0. It is not only about the customer journey, it is about technological resilience, scalability, robustness, resilience and more importantly cyber security,” he added.