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Tuesday, July 31, 2001

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SBI tech initiative awaits Govt. nod

By P. Vikram Reddy

HYDERABAD, JULY 30. State Bank of India expects Government's clearance to its proposal for setting up a wholly owned subsidiary to handle its Rs. 700 crore technology upgradation programme in 15 to 20 days. This will set the ball rolling for the biggest technology initiative in the Indian banking history.

SBI already has approvals from its board as also the Reserve Bank of India, and it had also replied to queries raised by the Government on the issue. Once Government's clearance is obtained, SBI will hive off its technology division to form the new subsidiary, according to Mr. Y. Radhakrishnan, Managing Director.

SBI expected to spend about Rs. 500-700 crores in three years on its technology upgradation, in addition to Rs. 600 crores already spent in the last five years. Besides implementing this programme, the subsidiary would also be available as a service unit for the entire banking industry, Mr. Radhakrishnan said, while speaking to The Hindu here on Monday.

The MD took pride in detailing the initiative, which he said confidently, would make SBI a `worldclass bank' in three years.

By March 2002, networking would cover 350 branches in 42 centres (40 per cent of branches). The bank was in the final phase of selecting vendors and solutions for this.

As of now 76 per cent of the bank's business has been computerised, and this will be 80 per cent in three years. Technology upgradation has various components such as video- conference facilities linking Chairman and managing directors to 14 circles, increasing ATMs from 600 to 1,000 by March 2002 and linking them. Another significant component is linking of rural branches using the ``hub and spoke method'', creation of the electronic payment gateway, and inter-office reconciliation (e- recall). Then there is the `electronic learning project', where State Bank India Institute of Communication and Management (SBIICM) has a crucial role to play.

In the process, the subsidiary will have `strategic alliances', with some core area specialists like in the case of NCR for ATMs. Some of them could also be given equity in the subsidiary, though nothing has been finalised as of now. On the other hand, it is too early to say if it will go public, he says.

The bank is also planning a tie-up with retail consumer goods outlets, and the Railways. It is hopeful of offering railway reservations through a combination of Internet and ATMs. Demonstrations were over for a smart card operations tie-up with IOC.

On the package deal between Unit Trust of India and pubic sector banks, he said SBI offered a credit line and it had taken `prudent commercial decisions' while trying to help out UTI. `It is a good business for us'', the Managing Director asserted.

Asked for his opinion on reports today that the RBI was considering permitting foreign banks to buy branches of public sector banks, he said ``For SBI, selling does not arise'', adding that it might have more to do with other banks.

Mr. Radhakrishnan ended on an optimistic note stating that credit was picking up and with 72 per cent of the country getting `good monsoon', agricultural offtake will be good, which in turn will lead to a pick up in demand for consumer goods.

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