The Hindu Business Line : SBI plans separate entity for rural biz

Mumbai, Sept. 6 Rural seems to be the flavour of the season. The country’s biggest bank, State Bank of India, is firming up plans to expand its rural business and set up a separate entity for the same within the next three years.

This was the thrust of the day’s discussions at the three-day conclave of the bank’s senior officials being held in Mumbai.

According to an official from SBI, the plan is to have a vertical split of the bank’s structural organisation into rural and metro-urban.

The rural network would also offer products such as personal and home loans while the metro-urban branches would offer agri products along with other products.

With big corporates such as Reliance, Bharti, ITC and others getting into agri and allied businesses, there is scope for such products even in urban areas, the official pointed out.

Under SBI umbrella

It is not clear whether the separate unit for rural would be a subsidiary or another bank equivalent to SBI, the official added. But it would be within the SBI umbrella.

In order to take advantage of the growing agriculture business in India, SBI has been focusing on the agri sector in a big way

It had set up the agri business unit, headed by a Deputy Managing Director in March 2004. Agricultural advances grew over 30 per cent in 2006-07 and even in the first quarter of 2007-08.

Farm loans

In the 2006-07 fiscal, agricultural advances grew by 33.02 per cent to Rs 34,993 crore (Rs 26,305 crore) and in the first quarter ‘07-‘08, to Rs 36,922 core (Rs 28,356 crore), a growth of 30.21 per cent.

Revamp

During the conclave, senior SBI officials will thrash out issues like how to restructure the current organisational set-up, ways to provide incentives to the staff and the new vision for the bank.

“The collective feeling is that the vision of SBI does not reflect the true aspirations of the bank any longer. So the meeting will also discuss Parivartan,” said the official.