At State Bank of India, it's all about lending a hand to India’s growth

For a Musahar community village in Samastipur district of Bihar, State Bank of India (SBI) is much more than a bank. 

 

For it ended their drudgery of travelling four kilometres to a kirana shop  just to charge mobile phones.

 

SBI fellows Somil Daga and Ajay Kumar, two engineers, installed a solar powered charging station in their hamlet in collaboration with Aga Khan rural support organisation. Now, they are building a solar powered lighting station at a cost of Rs 80,000 that will light up every household with one bulb. 

 

SBI is not just a banker to every Indian. Its several rural and financial inclusion programmes are touching thousands of lives, who are out of reach for most non-governmental organisations.

 

Under the SBI Youth For India, a one-year fellowship programme which it runs with a group of NGOs, the bank ropes in professionals from prestigious institutes such as IITs, IIMs and foreign universities. They come up with solutions for the marginalised sections. Professionals from Tata group, Future Group, Deloitte, Infosys, IBM, Accenture, MindTree, Cap Gemini have joined the fellowship to make a difference.

 

Arundhati Bhattacharya, chairman of SBI, said, “Youth for India programme provides a stipend for 13 months to young people to work alongside reputed NGOs in projects of their choice in the rural areas. The fellows are greatly benefited by the experience while the rural folk also benefit from the projects.”

 

Many fellows come and the work overwhelms them. 

 

Shuvajit Payne, who worked for IBM in London, was in the first batch of fellows who never went back, He is now part of the SBI Youth for India organising committee. “This is a short digression from my core area of interest. My fellowship year opened my eyes to the fact that education and health are two areas where the country needs a lot of innovation as well as infrastructural support. And going forward, I would like to plunge into the education sector,” he said.

 

Geeta Verghese, coordinator, SBI Youth for India programme, said, “The only purpose that SBI has in these interventions is to try and implement programmes relating to health, education, market linkages in the most remote and tribal areas of various states. The fellows come from premier institutes and from reputed companies and are trying to find solutions to local problems.”

 

Even in the financial inclusion programme the bank is leaving its imprint on rural India. Despite the odds, the bank has covered 88,000 villages under the financial inclusion plan with 7.28 crore accounts in villages inaccessible by roads. Of this, the Prime Minister Jan Dhan Yojana (PMJDY) accounts for 3.33 crore accounts.

 

The journey is ardous. The drive to reach financial inclusion to remotest corners takes the outreach officers to troubled areas in North East and Jammu & Kashmir and difficult terrains.

 

A young lady officer who worked as an outreach officer conducting literacy camps in North East said. “Extremist movements are rampant in Manipur, so we wind up our work early in the evening. Army vans start patrolling and extremists also get active, and we could be caught in the crossfire.”

 

An SBI officer said while travelling from Ranchi to Chirkunda one late evening he was asked to switch off the car  lights. 

 

“Without head lights with just moonlight we drove the entire distance of 50 km. But it was a satisfying experience to get the poor villagers into the banking fold,” he averred.

 

Backed by such efforts, the bank has set up 58,000 customer service points across the country run by locals which the community trusts. Two such points are at Malwana and Sumkber

Barhog villages in J&K, about the 55 km from the nearest branch at Doda. The points, run by Sharif Bhatt and Ranjeet Singh, are on a hill top, which is covered with snow in winter and faces landslide in monsoon. In these militancy-affected beautiful hamlets 1,000 accounts have been opened, half of them PMJDY.

 

In Jangmpal village which is situated in a Naxal affected area in Chhattisgargh, Jitendra Singh, an SBI officer, has opened 1,128 accounts up to March 2015 with transactions of up to Rs 48.81 lakh.

 

Bhattacharya said financial inclusion is a matter of faith for the bank. “We genuinely believe it is win-win situation for all the stake holders—for customers access to finance at reasonable rates, which leads to the improvement in the standard of living, and for the bank a profitable avenue of business, and for the government the ability to target the needy to avoid leakage. We also believe that simultaneously we need to invest in financial literacy and hand holding.”

 

It’s not just the poor. SBI has fuelled the rise of almost all the Fortune 500 companies in India, nurturing their growth from small enterprises to big multinationals. When Tata Steel was acquiring Corus, biggest acquisition by Indian firm at $12.9 billion, SBI stepped in when some foreign lenders developed cold feet. When Tata Motors was acquiring the JLR marquee, SBI solved with the finance tangle. In telecom Bharti Airtel grew to become a multinational company with funding from SBI.

 

Not just those on the growth path, SBI has been a refuge for companies like Wockhardt when the tide turned against them.

 

A corporate debt restructuring package by banks led by SBI helped Wockhardt, which got into legal wrangles with foreign borrowers over the zero-coupon FCCBs, rebound to profitability. Instances like this abound in the annals of the bank’s 208-year history. 

 

“We have hundreds of cases like Wockhardt where handholding has helped companies get out of the problems. Many of the big companies were once small and medium enterprises when we have provided finance. If we did not restructure loans, provide them with additional finance, many of the companies would have simply vanished,” Bhattacharya told dna.

 

However there may be  a concentration risk with 36% of its Rs 12 lakh crore advances directed at large corporate and mid-corporate companies. Of this, the very large corporates account for just 19% of the bank’s total advances at Rs 239,618 crore and the mid-corporate account for 17% of the finance at Rs 220,683 crore followed by retail advances which account for 21% of the total advances at Rs 2,60,226 crore. About 10.88% of its total advances are to top ten firms.

 

But with the Reserve Bank of India planning to prune large exposures of banks by limiting the advances, this concentration may get spread.

 

B Sriram, managing director & group executive, national banking at SBI, said, “We plan to grow our retail book at 18% with focus on home loans, faster than most other advances. The bank already does over Rs 1,200-1,300 crore of home loan sanctions a day and we are seeing a pick-up in the demand for home and car loans.”

 

The Indian public has incredible faith in the public sector behemoth. The comfort that the Indian public has in the bank was also visible during the global financial crisis, when people withdrew deposits from private and foreign banks and put them in PSU banks, especially SBI.