‘SBM Bank tar­get­ing as­set size of ₹5,000-6,000 cr’

The Hindu Business Line - - BANKING - K RAM KU­MAR

En­thused by the strong bi­lat­eral trade and in­vest­ment ties be­tween In­dia and Mau­ri­tius, as well as the long-term growth op­por­tu­ni­ties of­fered by In­dia, Mau­ri­tius-based SBM Hold­ings re­cently formed a wholly-owned bank­ing sub­sidiary (WOS), SBM Bank (In­dia) Ltd.

The four branches of SBM

Bank (Mau­ri­tius), which has been in In­dia since 1994, have mi­grated to SBM Bank (In­dia) Ltd with ef­fect from De­cem­ber 1.

SBM Hold­ings is the first for­eign en­tity to set up a whol­ly­owned sub­sidiary for its op­er­a­tions in the coun­try. Sid­harth Rath, MD & CEO, SBM Bank (In­dia), says his bank is a start-up bank. To be­gin with, the bank will fo­cus on busi­nesses such as lend­ing to the MSME (mi­cro, small and medium en­ter­prise) and mid-mar­ket seg­ments, trade fi­nance, cap­i­tal mar­kets, wealth man­age­ment and re­mit­tances.

In an in­ter­view with Busi­nessLine, Rath, a for­mer Axis Bank vet­eran, un­der­scored that his bank will look at prod­ucts and busi­nesses, which are cap­i­tal-ef­fi­cient, thereby en­abling it to churn cap­i­tal. Ex­cerpts:

OWhy did SBM Hold­ings con­vert its In­dia bank­ing op­er­a­tions into a wholly-owned sub­sidiary?

As a branch, we had cer­tain re­stric­tions on func­tion­ing. The de­ci­sion-mak­ing was driven by the par­ent. So, the TAT (turn­around time) was de­layed. There were re­stric­tions in terms of ex­pand­ing the branch net­work. So, the WOS mode is to po­si­tion SBM as an In­dian bank.

On a stand­alone ba­sis, we will have in­de­pen­dence and de­ci­sion-mak­ing will be quick. We can now adapt best to In­dian con­di­tions and move ahead. We have a long-term view on In­dia.

So, the WOS mode is best suited in view of the long-term op­por­tu­ni­ties that we are see­ing here. Our bank is a start-up. But we have an as­pi­ra­tion and am­bi­tion to build one of the finest fi­nan­cial in­sti­tu­tions in the coun­try. That is the ba­sic in­tent. I am sure we will do it. So, it is an op­por­tu­nity first of all to get a bank­ing li­cence and then work on that. We are a uni­ver­sal bank. Ini­tially, we will be fo­cussing pre­dom­i­nantly on whole­sale bank­ing on the as­sets side, and a re­tail li­a­bil­ity fran­chise.

Our ob­jec­tive is to see that the as­set fol­lows the li­a­bil­ity pro­file and foot­print. We don’t want to ramp up as­sets and there­after go search­ing for li­a­bil­i­ties and carry (as­set-li­a­bil­ity) mis­matches. These are the broad thoughts with which we started.

What are your branch and busi­ness ex­pan­sion plans?

In terms of phys­i­cal pres­ence, over the next two years, we are look­ing at in­creas­ing our net­work from the cur­rent four branches to 16.

Of the 16 branches, four will be in un­banked ar­eas and 12 in met­ros. As a start-up, we have to first learn to stand up and take baby steps. So, we are in that phase now.

The build­ing blocks, the en­ablers, and the struc­tures, should be in place in the next cou­ple of months. We will grad­u­ally ac­cel­er­ate busi­ness. We are tar­get­ing an as­set size of ₹5,000-6,000 crore in

the next cou­ple of years.

How many bankers are you plan­ning to hire?

To­day, we need good bankers. But we are not look­ing at high-fly­ing bankers.

We will hire around 550 peo­ple. With more of au­to­ma­tion/ digi­ti­sa­tion, the over­all re­quire­ment of man­power is some­thing that has to be looked at. Be­ing a small bank, we have to look at a mod­u­lar ap­proach in terms of tech­nol­ogy and dig­i­tal of­fer­ings, which are of the plug-and-play kind and are not cap­i­tal-in­ten­sive.

We are look­ing at an open (tech­nol­ogy) model where we can, af­ter a par­tic­u­lar du­ra­tion, ei­ther up­grade or have the op­tion to re­place if some­thing bet­ter comes in. The dig­i­tal of­fer­ings have to be func­tional, in­ter­ac­tive, and con­ve­nient to use.

Will the ₹500 crore cap­i­tal be suf­fi­cient for your busi­ness plans?

The min­i­mum cap­i­tal re­quire­ment for start­ing the WOS is ₹500 crore. We have to squeeze this till the last drop in terms of re­turns over the next cou­ple of years. Plus, we can raise TierII cap­i­tal, which is 50 per cent of Tier-I cap.

YZ

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