State Bank of Travancore: On the threshold of transformation

Positive business sentiments, improved consumer confidence and controlled inflation are likely to boost economy, notes SBT

State Bank of Travancore (SBT) is a leader in the NRI banking space. It offers a wide variety of attractive and customised NRI products and services. The bank set up a representative office in Dubai in 2008. It also manages two exchange houses: City Exchange LLC, Dubai; and Global Money Exchange Company, Oman. It has also posted a dozen relationship managers in Qatar, Oman and Bahrain to ensure smooth business facilitation for NRI clients. Excerpts from an interview with M K Bhatacharya, General Manager (BS & RB), SBT:
How do you view developments in the Indian banking industry?
The Indian economy is on the threshold of a major transformation, with expectations of policy initiatives being implemented. Positive business sentiments, improved consumer confidence and more controlled inflation could help to boost economic activity. But there are certain challenges that banks will face in the coming months.
The credit growth of all scheduled commercial banks has continued to be moderate and flat with single digit figure in the last six months and the asset quality has seen sustained pressure due to continued economic slowdown. It is expected that once the investment cycle gathers momentum, credit demand will pick up and we can see an improvement in asset quality.
It is expected that the Reserve Bank of India (RBI) will exercise caution and maintain the current stance on interest rates. There are mainly two factors that are preventing RBI from lowering interest rates. First, the Consumer Price Index (CPI) inflation rate on a year-on-year basis for June 2015 jumped to 5.4 per cent. Food inflation also jumped to 5.48 per cent year-on-year from the 4.8 per cent in May, with pulses (22 per cent), spices (9.71 per cent), and milk products (7.18 per cent) being the major contributors. A target of 6 per cent or below level of inflation by 2016 could restrict RBI to lower further interest rate.
Second, there are strong expectations of a reversal of policy interest rates in the US in 2015 that would narrow the differential with Indian rates, leaving RBI little elbow room to cut rates further.
How has SBT's remittance business fared?
The volume of remittance through our bank was Rs398.8 billion during 2014-15. We expect to reach a level of Rs500 billion. Around 40 per cent of remittance from abroad to Kerala is routed through our bank.
The rupee-dollar relationship is extremely volatile now. Exchange rates are favourable for expatriates. This is reflected in the volume of remittance. Remittances increased by Rs23.29 billion during the first quarter this year in comparison with the corresponding period last year.
Is SBT planning to draw NRI funds into the pension system?
What are SBT's plans for NRIs?
We are coming out with new products and schemes. This year we launched an NRI Family card. A unique prepaid card issued to resident Indians, it can be recharged by NRE/NRO account holders through Internet banking. A card holder need not be an account holder of the bank.
We introduced a new product SBT Flash, which ensures real time credit to the account of the beneficiary. To know the status of the remittances made through exchange houses, we introduced online remittance tracker on our website.
In the current financial year we are proposing 100 new branches in India and another 35 tie-ups with exchange companies. As a result people working in the Gulf can send their remittances to India easily and their family can utilise them at their doorstep.

• India