P.K. Malhotra in Calcutta on Thursday. Picture by Kishor Roy Chowdhury
Calcutta, Dec. 5: The State Bank of India is developing an automated system to offset the higher costs of financial inclusion, which involves a heavy amount of manual intervention.
“Our IT spend may go up 10 per cent this year,” P.K. Malhotra, deputy managing director of the SBI, said on the sidelines of Infocom 2013, an ABP initiative. The SBI spent about Rs 900 crore on IT last year.
Business correspondents play a significant role in linking the SBI with the poor, but the approach is costly because it is labour-intensive.
Malhotra said the SBI was trying to automate the interactions of the correspondents that should cut costs.
“Lot of initiatives are being taken to bring down the cost. We are trying to put in automated technology platform with a focus on financial inclusion accounts which are mobilised by business correspondents. By developing the necessary back-end system, we are trying to take out the manual intervention and slash cost,” Malhotra said.
The number of accounts through banking correspondents for the SBI has increased to 241 lakhs at the end of September 30 from 162 lakhs at the beginning of the fiscal.
About 34 per cent of the new savings bank accounts opened by the bank this year had been through correspondents.
Besides, the accounts opened through correspondents are zero-balance accounts with small sums kept in them, leading to a fall in the ratio of current and savings account (Casa) deposit to total deposit.
“We are opening a lot of free savings bank accounts where the actual balance is not as much as normal savings bank account,” Malhotra said.
The Casa ratio in the September quarter was 43.58 per cent against 44.95 per cent in the same quarter last fiscal.
Automation is expected to improve the Casa ratio: zero-balance accounts will go up on automation. When such accounts increase, the bank expects deposits in them to go up too, improving its Casa ratio.
Malhotra added that lending in agriculture was rising and a number of rural account holders were using gold as collateral. “We expect the credit flow to the agri sector to grow 20 per cent this fiscal.”
The gold loan portfolio is also witnessing a healthy growth. “We have a gold loan portfolio of over Rs 30,000 crore and it is growing at 70 per cent. However, we are not pushing this product separately as we do not want to be recognised as a gold loan company,” Malhotra said.