SBI to Focus on Service, Not Interest Rates in Deposit Growth Strategy

The new chairman of SBI, C S Setty, stated on Friday that the pressure to increase deposits will likely continue in the banking sector for a while. However, he emphasised that the bank will not engage in a rate war to attract deposits. Instead, SBI will focus on its customer service and extensive network to drive deposit growth.

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Deposit Competition and Growth Targets

Setty, who assumed his role on Wednesday, mentioned at the Global Fintech Fest that competition for deposits is expected to persist. He revealed that SBI aims for a credit growth of 14-16% in FY25. This target is sustainable with an 8-10% deposit growth due to the bank's substantial base of liabilities.

Speaking to reporters, Setty highlighted the bank's strong balance sheet and plans to build on its strengths. He also announced the anticipated launch of YONO 2.0 in November for a closed user group, followed by a broader release.

Digital Channels and New Offerings

SBI aims to secure 90% of its retail unsecured loans through digital channels. Setty noted that the bank has already disbursed ₹1.3 trillion in personal loans via the YONO app. On Friday, he introduced three new services to improve commuting experiences across India: the MTS RuPay NCMC prepaid card offline payment solution, a one-view mobile app, and an advanced design for SBI FASTag.

Meanwhile, Axis Bank's CEO Amitabh Chaudhry spoke at the same event about zero-balance accounts not yet reaching significant scale within the system. He also addressed concerns about rising fraud incidents making people hesitant to conduct banking transactions.

Chaudhry announced that Axis Bank will soon offer a service on its mobile app allowing customers of other banks to perform transactions, not just view account details. The bank is currently running 15 pilots on artificial intelligence and machine learning, including one in Human Resources to streamline resume screening and hiring processes.

SBI's strategic focus on leveraging its customer service and network, along with its digital initiatives like YONO 2.0, reflects its approach to navigating competitive pressures in the banking sector.