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SBM Bank (India) Envisions An Expansion Of 16 Branches By The Year 2022
With new strategies around converting Non-Performing Assets to create growth, SBM (India) discuss their plans to double its presence in the world’s third largest economy (India).
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With an intent to disrupt one of the biggest economies in the world, the State Bank of Mauritius is keen to expand its footprint in India. In an interview with BW Businessworld, Andrew Bainbridge, Group CEO, SBM shares their strategies and growth plans in India.
How do you envision the economic activity shaping up in India? SBM Bank is the first foreign Indian bank that has received a license to operate in the WOS mode.
India is growing to become the third largest economy in the world. We expect India to witness strong economic growth in 2019, after emerging as the fastest growing major economy in the world in recent years. Better demand conditions, capacity expansion from growing investments in infrastructure, continuing positive effects of reform policies and improved credit offtake, especially in the services sector, will sustain the robust GDP growth.
The strong ties and excellent diplomatic relations shared between Mauritius and India and which span several decades have been the driving force for establishing our presence in the Indian sub-continent in 1994. We currently have four branches across the country, Mumbai, Chennai, Hyderabad and Ramachandrapuram which previously operated as branches of SBM Bank (Mauritius) Ltd.
SBM is the first foreign institution to obtain a license from the Reserve Bank of India to set up a universal banking business in India through a Wholly Owned Subsidiary (WOS) and recently we celebrated the formal opening of SBM Bank (India) Limited by the Honourable Pravind Kumar Jugnauth, Prime Minister of the Republic of Mauritius.
Our transition to a full-fledged banking service in India will offer us a better reach and presence in the Indian market. Moreover, this enables the Bank to build a robust franchise in a well-diversified manner and build capability with a mix of domestic and offshore products available to resident individuals and companies.
It further strengthens our capabilities for financing trade and investment flows along the India-Africa corridor and our emergence as a key financial player in the region, building on our presence in India, Africa and across the Indian Ocean region.
We have aspirations and ambitions to build a strong financial institution in the country. The building blocks, the enablers and the structures, should be in place in the next couple of months. We will gradually accelerate business. We also wish to make banking more convenient to our customers and will take a modular approach in terms of technology and digital offerings.
Please elaborate on SBM Bank India’s expansion plan and how do you see the bank in the next five years?
SBM Bank (India) Limited plans to double its network by setting up four new branches by the end of March 2020 and increase this to around 16 in the next two years.
Which are the major areas and sectors you are planning to focus on?
SBM Bank (India) will emphasize on the mid-market segment comprising mid-corporates and higher end SMEs, trade finance, capital markets, wealth management and remittances. One of the key focus areas of SBM Bank India will be to build up a robust liability franchise.
How about hiring plans to manage the expansion?
With our expansion plan, we will surely have people to manage the key operations but we will use technology to our advantage. Our intent is to be a lean bank with automation, efficiency, and agility as key cornerstones.
How are you planning to meet the capital requirements?
The minimum capital requirement for starting the WOS is Rs 500 crore which has already been infused. Depending on the needs of the business, we may infuse more capital in the future. Further, we can also raise Tier II capital at a later stage if required.
We see Internationalisation as the key pillar in SBM’s vision - and your goal to project SBM as the regional Bank in the Indian Ocean and Africa region – can you elaborate on this.
From the internationalisation perspective, the conversion of our Indian operations to a WOS will reinforce our capabilities for financing trade and investment flows along the India-Africa corridor and our emergence as a key financial player in the region, building on our reinforced presence in India, Africa, and the Indian Ocean region.
Also, entities having an India-Africa presence or business will benefit from the scale advantages of banking with SBM across multiple geographies.
I would like to highlight that in less than one year, SBM Bank (Kenya) has grown inorganically from a Tier-3 player to a strong Tier-2 bank, operating around 60 branches and serving more than 200,000 customers. This is an indicator of our growth potential.
How is the trade corridor between India – Mauritius and Africa expanding and what is the role of SBM in this?
Experts state that Africa is characterized by a major financing gap in respect of trade and infrastructure. With the African continent expected to undergo a phase of sustained expansion, the trade and infrastructure requirements are expected to grow accordingly. India is well-positioned to be one of the main supply countries for Africa. For its part, Mauritius can leverage its excellent diplomatic and economic relations with India and Africa to serve as a bridge between these two regions through its buoyant international financial center. Being present in all these geographies, SBM aims to become a key player along the Asia-Africa corridor.
What is your overall take on NPA across the industry? How are you prepared to tackle such a situation going forward?
We remain fundamentally optimistic about India. The Indian economy will continue to witness robust growth, underpinned by good demand. India has made good progress in developing an institutional framework with IBC. It has begun to change the creditor’s and borrower’s behaviour. Payment discipline has also improved on account of the IBC framework, credit bureaus, and strong collection mechanisms. These are positive factors which will boost foreign investors interest.