SBI developing low-cost model to counter payments banks
22 Aug 2015 8:22 AM IST
Country’s largest commercial banking entity State Bank of India (SBI) is now developing a low-cost model to compete with payments banks.
“We are working out on a low-cost structure to compete with the payments banks for getting access to people living in the remote areas”, SBI chairman Arundhati Bhattacharya said on Friday.
Bhattacharya said that the only advantage which the payments banks would have over other banks is that they would be able to get access to remote parts of the country.
“There will be payments banks associate sitting in every second home in a village as their operational costs are lower compared to normal banks”, she said at <g data-gr-id="21">a FICCI</g> meet here. To counter that, SBI would be opening customer service points (CSPs) in unbanked panchayats and also train youth with minimum education so that they are able to operate a mobile phone, printer and a scanner.
Bhattacharya said that the mobile wallet which SBI had recently launched, Buddy, would also work within the realm of a payments bank. The biggest disadvantage which the payments banks would have is that they would not be able to give loans as they do not have any history of the credit profile of their customers.
“These payments banks are only for small remittances and cannot give any loans”, she said. “History of credit is very important”, she added.
Meanwhile, employees’ union opposes payment banks’ entry
A leading bank employee union on Friday opposed setting up of payment banks and said their entry will hurt the interest of public sector lenders. RBI has granted in-principle approval to 11 entities to set up Payment Banks, who will be able to collect deposits (initially up to Rs 1 lakh per individual), provide Internet banking, facilitate money transfers and sell insurance and mutual funds. They can issue ATM/debit cards, but not credit cards. “This is nothing but a direct attempt to boost private sector banking and minimise the role of public sector banks and also to reduce their market share,” C H <g data-gr-id="67">Venkatchalam</g>, All India Bank Employees Association (AIBEA) General Secretary, said.
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