State Bank of India (SBI) plans to open 400 new branches nationwide in the current financial year as part of its network expansion plan. Last year, the country’s biggest lender opened 137 branches, of which 59 were in rural areas.
Despite 89% of digital transactions and 98% outside the branch, SBI Chairman Dinesh Kumar Khara believes branches are still necessary. In an interview with PTI, he explained that branches are required because new emerging areas need banking services.
SBI Plans to Open 400 New Branches
Last year, the bank opened 137 branches, with 59 of them in rural areas. Despite 89% of digital transactions and 98% of transactions occurring outside branches, SBI Chairman Dinesh Kumar Khara emphasizes the continued importance of physical branches.
He explained that branches are necessary because new areas are emerging that need banking services, and certain services, such as advisory and wealth services, can only be offered from a branch. Khara mentioned that SBI will identify locations with opportunities and plans to open branches in those areas, aiming to add nearly 400 branches this year. As of March 2024, SBI’s network consists of 22,542 branches nationwide.
SBI’s Plans for Monetizing Subsidiaries
When asked about monetizing SBI’s subsidiaries, Chairman Dinesh Kumar Khara stated that SBI would wait for these subsidiaries to scale up their operations further before listing them. This approach is intended to increase their valuation and ensure better returns for SBI.
Khara mentioned that the monetization of subsidiaries would be done through the capital market. The subsidiaries likely to be considered for this route include SBI General Insurance and, potentially at a later stage, SBI Payment Services. However, there are no immediate plans for such actions. SBI’s current strategy is to scale up these subsidiaries further before considering listing them on the capital market. This scaling up is not planned for the current financial year.
Capital Infusion and Stake:
During the year ending March 2024, SBI infused additional capital of Rs 489.67 crore into SBI General Insurance Company Ltd. The company also allotted Employee Stock Option Plans (ESOPs) to its employees, resulting in a decrease in SBI’s stake from 69.95% to 69.11%.
Performance and Ownership of SBI’s Subsidiaries
- SBI General Insurance:
SBI General Insurance, a non-life subsidiary of the State Bank of India, reported a significant rise in net profit, reaching Rs 240 crore for the financial year ended March 2024. This marks a 30.4% increase from the previous year’s net profit of Rs 184 crore.
- SBI Payment Services:
SBI Payment Services Pvt Ltd, primarily engaged in the merchant acquiring business, is 74% owned by SBI, with the remaining stake held by Hitachi Payment Services. As of March 2024, SBI Payments stands as one of the largest acquirers in the country, boasting over 33.10 lakh merchant payment acceptance touchpoints, including 13.67 lakh POS machines spread across various geographies. However, the company’s net profit declined to Rs 144.36 crore for March 2024, compared to Rs 159.34 crore in the previous year.
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