The Hindu Business Line : Public sector banks too offer online trade services

Not to be left behind private banks, several public sector banks are tying up with broking firms to offer online trading services. In the last week, three public sector banks announced trading services and a few more banks are also expected to follow.

While the securities firms provide the trading facility, banks provide savings and demat accounts. For the banks, it means a new source of fee income, more floating funds and a larger base of low cost deposits in the form of savings and current bank accounts.

State Bank of India, which tied up with Motilal Oswal Securities, already has 65,000 demat clients and is targeting 1,50,000 clients. "Online trading will give us floating funds," said Mr Sangeet Shukla, Chief General Manager, (Personal Banking).

Punjab National Bank has tied up with IDBI Capital Market Services and Oriental Bank of Commerce with ILFS Investmart. Bank of India is linking up with Asit C. Mehta Investment Intermediates Ltd.

Union Bank of India has been offering online trading services since November 2005 with SSKI Securities and has 1.1 lakh demat accounts. "This segment is growing by substantial numbers. Another advantage is that the balance in the accounts remains with us," said Mr M.V. Nair, Chairman and Managing Director, Union Bank of India.

Bank of Baroda, too, has plans to offer depository services once its Core Banking Services are extended to more branches, said Mr Ajay Kumar, General Manager. As of now, the bank offers demat account facilities at 11 centres and plans to extend it to about 600 branches in the next few months. Online retail trading is getting popular as investible surpluses with retail investors swell the purse, said Mr Kedar Deshpande, Vice-President, ICICI Direct.com, the online broking subsidiary of ICICI Bank.

Banks retain customers with online trading, while investors gain from having a link with their demat, trading and savings accounts. Electronic fund transfer acts as a bonus.

ICICI Direct.com has 10 lakh customers in the last six years. While there are about two crore shareholders, there are only about 19 lakh registered Internet trading customers indicating the scope for online trading, Mr Deshpande added.

For IDBI Capital, which recently launched its online trading service, paisabuilder.in, tying up with public sector banks is an easier way of reaching out to a larger number of people, said Mr S. Muhnot, Managing Director and CEO, IDBI Capital.

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