State Bank of India (SBI), the nation’s largest lender, has announced a strategic pivot to emphasize deposit mobilization across its 22,600+ branches. This initiative aims to ensure that deposit acquisition is given equal priority as loan disbursal, as the bank faces growing competition from higher-yielding investment options like mutual funds, corporate bonds, and corporate fixed deposits.
Proactive Deposit Strategy
SBI’s leadership is urging its branches to adopt a more proactive approach, emphasizing outreach to potential depositors rather than waiting for them to approach the bank. The shift reflects the changing dynamics of the financial landscape, where customers have easy access to diverse investment options through digital platforms.
“If prospective borrowers can visit a branch for loans, bankers too should approach customers for deposits,” said Challa Sreenivasulu Setty, Chairman of SBI, in an exclusive interaction with BusinessLine.
Digital Transformation and Evolving Investment Trends
Setty highlighted how technological advancements and improving financial literacy have contributed to a shift in investment patterns.
“Previously, customers had to visit a branch to open a fixed deposit. Today, with just two clicks, they can invest in fixed deposits, SIPs, equities, or insurance products. This ease of transaction has made alternate investments more accessible,” Setty noted.
As of September 2024, SBI reported total deposits of ₹51.17 lakh crore, including ₹49.10 lakh crore in domestic deposits. Gross advances stood at ₹39.20 lakh crore, with ₹33.33 lakh crore in domestic advances.
Refocusing on Deposit Mobilization
Setty emphasized that SBI’s vast branch network is fundamentally a deposit mobilization platform.
“During periods when deposits flowed naturally into banks, the focus shifted to selling loan products. But deposit mobilization is a core function of our branches. We are now revitalizing this focus and asking corporates, individuals, and SMEs for deposits during our engagements,” he said.
Avoiding Price Competition
Despite the renewed focus on deposits, Setty clarified that SBI does not intend to compete on pricing.
“No matter how much we pay on deposits, it cannot match the returns on SIPs or mutual funds. Deposits, however, offer unique advantages like liquidity, safety, and the convenience of our extensive branch and digital networks,” he explained.
Innovative Combo Products
To enhance customer engagement and foster loyalty, SBI is developing innovative combo products that combine the benefits of fixed deposits and systematic investment plans (SIPs).
“We’re working on products where interest earned on fixed deposits can directly flow into SIPs. Such combinations will offer customers both security and growth, increasing their stickiness to the bank,” Setty shared.
Looking Ahead
As competition intensifies for savers’ funds, SBI’s renewed focus on deposit mobilization aims to strengthen its foundation and maintain its leadership position. By leveraging its extensive network and innovative product offerings, the bank is looking to strike a balance between tradition and modernity in its approach to customer engagement.
