SBI sets up global-link office for correspondent-banking services
Pratibha Rathore
MUMBAI, December 28: The State Bank of India (SBI) has set up global-link services to offer correspondent-banking services to domestic banks. It has appointed Natwest Bank as its clearing agent in London. The London-based bank will represent SBI at the British Clearing House for faster clearance of all pound- sterling instruments.SBI is now the first Asian bank to venture into the international correspondent-banking services segment, traditionally dominated by a handful of foreign banks -- Bank of America (BankAm), Bank of New York, Bank of California, Chase Manhattan, Barclays Bank and Deutsche Bank. The bank has set up its own software designed by Ionic Systems Ltd. The foreign banks handle collection instruments worth $25 billion annually on behalf of the Indian banks. While BankAm, Bank of New York, Bank of California and Chase Manhattan deal with dollar funds, Barclays Bank collects pound-sterling funds and Deutshe Bank, the Deutsche Mark. SBI will offer services like collection of
foreign-currency cheques, export bills and letter of credit. At present, 90 per cent of SBI's export collection and instrument collection is handled by foreign banks. The country's largest commercial bank's plunge into relationship banking is significant as the focus is increasingly on fee-based income. In the last fiscal, SBI's fee-based income registered a 4.3 per cent growth at Rs 2,643 crore, up from Rs 2,257 crore in the previous fiscal. In contrast, the interest income during the period went up by 15.37 per cent -- from Rs 12,958.57 crore (1995-96) to Rs 14,950.66 crore (1996-97). In 1994-95, the fee-based income was about Rs 2,022.62 crore and the interest income was Rs 10,652.14 crore. The bank plans to go all out to raise its busines in the fee-based segment as the interest income is set to take a beating after the tardy credit growth this fiscal coupled with the lower prime-lending rate (PLR), now pegged at 14 per cent. SBI is bullish about its latest endeavour to offer correspondent-banking
services as it sees a potential demand for value-added banking services despite the correspondent banking business being controlled by a clutch of foreign banks. "Correspondent banking is an extension of our international-banking system. Our wide network in India and abroad has given us an opportunity to offer our services to the Indian banks," said SBI deputy general manager (global link services) TS Bhattacharya. According to him, it is only now banks are realising the importance of correspondent banking as a revenue-generating product. Global correspondent banking is a new business for domestic banks. Almost all Indian banks have fee-based arrangements with foreign banks having an international presence to provide correspondent-banking services in countries they do not have their own branches. Through its global-link offering, the bank will offer its services to domestic and foreign banks located abroad without an outlet in India. The bank will tap its associate banks, nationalised banks with limited
overseas presence and private-sector banks.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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