As the year 2021 draws to a close, State Bank of India (SBI) UK operations chief Sharad Chandak reflects upon the journey of one of India’s leading banks as it celebrated its centenary year in the UK.
How do you see SBI UK’s role in the UK-India partnership?
Both the UK and India have big investments in each others' countries – the UK is one of the major investors in India and vice versa. The partnership is very comprehensive, covering science and technology and education. Indian students now have the option to gain work experience in the UK after their degrees, with some welcome changes to the visa regime. This presents the UK with a very strong talent pool from India.
The historical connect with the UK is such that you don't feel very distanced from India and this connect has been growing stronger.
SBI is on the board of the West Midlands India Partnership. We are also in discussion with the Manchester India Partnership.
The Midlands is keen to attract investments from India, for which the very basic thing required in banking and that is where SBI comes in. Besides the initial bank account requirements, we can help out with other financing activities. Anyway, SBI handles the India-UK trade business.
Therefore, SBI will definitely be a major part of the India-UK business corridor in future as well.
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Please trace the bank’s journey to its centenary year in 2021.
We started in 1806 as Bank of Bengal, later renamed as Bank of Calcutta. Further down, Bank of Madras and Bank of Bombay were formed. These three banks were called Presidency Banks, which amalgamated to form Imperial Bank of India in 1921 – the same year when the London Branch was launched.
So, SBI is in the UK since 1921. Initially when we started, there were only three line of activities - rediscounting of bills of bilateral trade, supporting government transactions and arranging the funds for the parent bank.
Over the period, the bank has grown and in 100 years, our balance sheet size has grown by 10,000 times. In the first year, our balance sheet was only £1,960 and now it is almost $20 billion. So, that is the extent of the growth.
Over the years, we started with international business and around 2010, we started in a big way in the retail operations. In 2015-16, the regulators came up with the concept of ring-fencing and wanted the retail business carved out into a local subsidiary.
In 2018, we formed a local subsidiary. Now, we have a London branch as a branch of the parent bank and an SBI UK Ltd as the subsidiary with 11 branches. Six are in London, four in the Midlands and one in Manchester. The subsidiary balance sheet size is almost £2 billion.
This growth is down to the trust we have built over the years, of the customers, employees and regulators, with our customer service, transparency and full compliance of the norms. We have also kept pace with the time, adopting new technologies as we go along. We have invested huge amounts and energy in best risk management practices. All of these aspects have helped us grow and come this far.
As part of the celebrations, we are also in discussions with local councils for tree plantation initiatives.
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What is the role played by technology?
In 2019, we launched the YONO app and there was a natural period of stabilising. It began as an option for existing customers to switch on to that app and transact through it. The next phase was to be able to open an account without the need to visit the branch, which took some time. That is now fully functional and almost 500 accounts a month are being opened through YONO. Its big advantage is also for long-term UK visa holders, who can complete their banking requirements as soon as the visa is issued in India and before they arrive in Britain. This is dubbed the Namaste UK account, which gives peace of mind to travellers. This service has been up and running for almost six months and Indian students and professionals coming to the UK will greatly benefit from this service.
The latest phase we are rolling out in the coming months will cover the NTBs – the New to Bank – customers should be able to remit their funds without having to open an account.
We also have a 24/7 faster payment network, giving wider service outside office hours.
How do you see the Covid pandemic impacting the banking sector?
The Covid-19 pandemic has impacted our lives in many way. Our priority was to take care of our customers and our employees. We gave a lot of flexibility to our employees, as we had to carry on functioning as an essential service.
Th governments stepped in with special dispensations and liquidity. We passed on these benefits to our customers with moratoriums on loan payments and also took case by case basis decisions. We also launched an education campaign to combat the increase in fraud to protect our customers.
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Is the banking sector also coping with some knock-on Brexit effects?
Unfortunately, before we could get a chance to assess the impact of Brexit, Covid struck. But Brexit happened in an orderly fashion as far as the financial world is concerned because people were aware and were planning accordingly.
The impact may be felt on small businesses and on the talent pool. But that is something that is happening across other geographies as well.
What are some of SBI UK’s focus product areas?
We offer the buy-to-let product, which is quite competitive in the market, the commercial mortgages and business loans. While we have kept pace with technology, at the same time we have never lost the human touch. That is among the big differentiators between SBI and some of the other banks.
Definitely, we get a lot of help from the Indian diaspora and that will continue. At the same time, we are also catering to customers locally with campaigns.
Now, the focus is less on adding any more brick and mortar branches and more on making our YONO app more robust.
We have also started a temporary Kiosk initiative for areas where we don't have much presence to help out people and reach out to every corner of the UK. This is in its initial phase and will be expanded over the coming months.
And, our relatively new Merchant Banking desk supports Indian Bond issues.
Considering the demand from many of our existing customers, we are considering entering into the Development Finance market as well. We wish to launch the same in the next three-four months, subject to required internal approvals.