`Technology has helped banks'

In its 90th year, the State Bank of Mysore's (SBM) motto is: go high-tech and be customer friendly. The bank has announced a 1 per cent reduction, over and above the Reserve Bank of India's (RBI) guidelines, in the interest rate on education loans extended to girl students. Piloting the bank's fortunes is M. Sitarama Murty, its Managing Director, who is "drawing up various business plans to record a profit of Rs.200 crores in 2003-04". Excerpts from an interview he gave Ravi Sharma.

What is your opinion about the new RBI guidelines for the banking industry?

Banks have been given a lot of freedom. With the protection that was available under the protected regime gone, the responsibility is now that much higher. We now have to operate in a deregulated environment. It is up to the managements of the banks to run the business on sound lines. In today's market, it is the customer who decides the performance of the bank. It is no more the question of offering or selling a product: the customer decides what he wants, at what rate, at what place and at what time. In other words the pricing, the product and delivery are decided by the customer.

Are some bank chief executive officers (CEOs) right in demanding more freedom, more reforms, and the power to fix the remuneration for their top managers?

Complete freedom for all is not conducive... . We are evolving slowly; it could possibly be quicker. Let there be freedom but also guidelines. With regard to the remuneration for CEOs, the RBI should consider what the CEOs' responsibilities are before deciding their pay. We have the same responsibilities as the CEOs in the private banks, who are competing for the same customer, but our remuneration is vastly different.

How is the SBM gearing to meet the challenge of the new banking regime? The spread has come down to around 2 per cent.

We now have to learn to live with small spreads, say between 1.75 per cent and 2.25 per cent, within which we should meet the costs and show profits. In an effort to face the fluctuations in the deregulated environment, we have strengthened our internal risk management and asset management systems. Our technology platform has been upgraded with the computerisation of 83 per cent of our business. With the SBM having interlinked its ATMs with the State Bank network, we now have 1,600 ATMs in 460 towns all over India. By the end of 2003 there will be 4,000 ATMs. During the second phase of our technology drive, all the 610 SBM branches in India will (in two years' time) offer core banking solutions.

What are the new products being offered by the SBM?

We offer life cover for our customers and home loan borrowers and pension plans. Besides, our branches distribute all SBI-Life insurance products. We have now approached the Insurance Regulatory Development Authority for clearance to offer general insurance. With our group company already offering mutual fund schemes, we hope to become a one-stop financial supermarket. Our other products include unique schemes for teachers and police personnel andloans to celebrate festivals and for emergency medical expenditure.

Is technology the name of the game?

Yes. Technology has not only brought better service to the customer, it has helped the bank. We now need smaller premises. Fewer man-hours are spent on routine duties and the number of customers visiting the bank's branches has come down.

Do you foresee a reduction in the number of bank branches?

We are very selective about opening new branches. When (slot) machines can dispense soft drink cans, why can't ATMs dispense cheque books and passbooks?