SBI Chief Setty wants branch staff to “ask for deposits”
State Bank of India (SBI) will galvanise its 22,600 plus branches to ensure that “asking for deposits” gets as much importance as offering loans.
This move comes amid intense competition for savers’ money from relatively higher yielding investment alternatives such as mutual funds, corporate bonds and corporate fixed deposits.
The message from the top seems clear – don’t wait for the depositor to walk into the branch, proactively reach out to him/her. When a prospective borrower can visit a branch for a loan, the Banker too should approach the customer for deposit(s).
In an exclusive interaction with businessline, Challa Sreenivasulu Setty, Chairman, SBI, said: “As the economy matures, investment patterns change. Ease of doing transactions also contributes to higher movement to other investment products.
“Just to give an example, earlier if someone had excess money in their account and wanted to invest in fixed deposit, they had to go to the branch. Today, with two clicks, you can move money to a fixed deposit. The same is the case with SIPs (systematic investment plans), equity investment, and insurance.”
Setty, who took charge of India’s largest Bank on August 28, 2024, underscored that financial literacy is improving, and people are becoming aware of the investment opportunities. And the ability of investing digitally has also contributed to the shift.
As at September-end 2024, SBI had total deposits aggregating ₹51,17,285 crore, including domestic deposits of ₹49,10,528 crore. Gross advances stood at ₹39,20,719 crore, including domestic advances of ₹33,32,533 crore.
Ask for Deposits
The SBI Chief elaborated: “When the deposits were flowing into banks, the focus was on selling mainly loan products. Banks were not focused on deposit mobilization. We always believe that the branch franchise is essentially a deposit franchise. The fundamental activity of a branch is to mobilize the deposits.”
In this regard, he emphasised that the Bank wants to galvanize its large network of branches.
“Considering that we have a very large network of branches; how do we enhance our reach to the customer? First thing, ask for deposits. This has got a significant impact because probably a lot of people have stopped asking for deposits. They were only asking whether the customer needed a home loan or a car loan.
“Now we have started asking corporates, individuals as well as SMEs for deposits in our engagement with them. But that alone will not help. We have to offer something more,” Setty said.
He emphasised that SBI does not want to compete on pricing. However much the Bank pays on deposits, it cannot compete with return on SIP or return on mutual funds.
Working on combo products
Setty highlighted that deposits have certain fundamental characteristics, they have liquidity, and they have safety. With SBI’s vast network, it is easy to transact. Digital reach is there, and physical reach is also there.
The SBI Chief said the Bank is combining all of them and also evaluating a couple of products, where it can combine fixed deposit and interest on fixed deposit going to a systematic investment plan (SIP). The Bank is working on a combo product. Setty underlined that the Bank has to engage with the customer to increase the stickiness.