No harm in privatising some public sector banks, says SBI chief

State Bank of India chairman Rajnish Kumar on Monday said ownership of the banks – whether they are in the private sector or government entities – does not matter, the primary concern is the governance issue in the banks. He said there is no harm in privatising some of the public sector banks.

Answering queries after delivering the seventh G Ramachandran Memorial Lecture, organised by the Southern India Chamber of Commerce and Industry through video conferencing, Kumar said he has always held the view that ownership of a bank is not an issue, the imprtant thing is how it is being governed.

Apparently referring to the Centre’s decision to bring down its stake in select PSUs, he said: “We have a badly governed private sector, or well governed public sector. We have both.”

Kumar said closure of any enterprise, be it public or private, is against the interest of the common man and taxpayers. “After the consolidation of the PSU banks recently, there are six large public sector banks which can take care of the social sector commitment of the country. Not only that, the current economic situation is different from the 1970s when nationalisation of banking sector was completed,” Kumar said.

On digital banking, the SBI chief said mobile banking may become the most-preferred banking channel, even more than internet banking. It is set to overtake internet banking in the days to come. “Out of 100 transactions at SBI, only nine transactions are being made in branches. While transactions at ATMs at the time of demonetisation were around 55%, now they are down to around 30%; and digital, mobile banking has seen a rise from 25-30 to 55% now,” he said.

The internet banking and mobile banking are going to make a major splurge. The model also makes lots of economic sense as transaction costs are reduced, he said. “For example, transaction cost at branch is Rs 60, at ATM Rs 9, in mobile and internet less than Re 1. If it involves business correspondence, it is about Rs 13,” he pointed out.

According to Kumar, transactions through digital banking have risen due to lockdown. During Covid, SBI delivered all its services without any interruption. Transactions through mobile were more or less equal to internet banking transactions. This was not the case three years ago, he said.

Asserting that the rise in digital banking is mainly because of the use of mobile phones by younger generation, Kumar said it will continue to rise. Currently, the bank has more than 2.7 crore mobile users and it is adding 10 lakh users every 10-15 days.