State Bank of India will focus on improving customer service and engage with depositors, rather than raising deposit rates, said the bank's new Chairman, CS Setty.
In an exclusive interview with NDTV Profit, Setty, who took over as chairman on Aug. 28, said that the bank will not look at growth at any cost.
“If I compete on deposits, I would compete on the non-rate contest, not the rate war,” he said.
Banks need to focus on product innovation, the new SBI chairman said. It is probably good to focus on creating a new product for customers which combines the benefits of fixed deposits, systematic investment plans and insurance. Such product design innovation, within the bounds of regulatory norms, is what is needed.
“We do not need rate innovation. It is very easy to offer 50 basis points higher,” he said.
Speaking about the banking system's struggle with maintaining deposit growth rate, Setty said that over the last decade, bankers globally had forgotten how to court depositors. This is because, a relatively loose liquidity situation around the world, was resulting in bank deposits coming easily.
“It is time to go back to our roots, start focusing on deposit mobilisation and customer service,” Setty said. “Many banks have an excellent reach. That reach has to be utilised.”
In the quarter ended June 30, 2024, SBI's outstanding deposits rose by over 8% to Rs 49 lakh crore. Term deposits rose by 12% year-on-year, while CASA deposits were up 2.6%. For the broader banking system, total deposits as of Aug. 9 stood at Rs 200.32 lakh crore, up nearly 11% from a year ago.
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