State Bank of India (SBI) is considering setting up a separate company for its private banking initiative, as part of a plan to garner a larger share of business from the country's burgeoning affluent class.
The new unit could provide banking and wealth management services to high net-worth individuals and families with an investible surplus of Rs1 crore or more. However, SBI is yet to finalise its criteria, V Murali, general manager at SBI's new businesses department said at the Private Banking India 2010 conference that ended in Mumbai.
The nation's largest lender, with more than 16,000 branches, along with its associate banks and subsidiaries, has a natural advantage of strong recall among the affluent. The bank has deep banking relationship with the rapidly growing small & medium enterprises segment. SME units are predominantly family owned, so the bank can leverage its strong mid-corporate and SME clients to offer private banking services, Murali said.
A separate company will give SBI the flexibility to match the salaries and other perks of the private sector and attract some of the best talent, which is scarce in this segment. Citigroup, Credit Suisse, Barclays, HSBC, and Standard Chartered, among others, see a huge growth potential in this area and are active in seeking out the affluent.
India is the second-fastest growing major economy after China and promises to have a rapidly growing number of individuals with large investible wealth. The number of high net-worth individuals with minimum investable assets of $ 1 million rose to 126,700 by the end of 2009, compared to just 84,000 in 2008, according to the a Merrill Lynch-Capgemini World Wealth Report. India has the second-fastest growing high net-worth market in Asia-Pacific, according to the report.
Private sector banks like ICICI Bank, Axis Bank, Kotak Mahindra Bank and finance companies have set up strong teams to offer integrated loans, wealth and property advisory services to lure and retain wealthy clients.
Chairman Om Prakash Bhatt at the annual general meeting in June said SBI plans to introduce wealth management services in a phased manner in 2010-11 to help high net-worth clients preserve and grow their wealth. This is in line with other efforts by the bank.
Small steps were made by SBI a few months ago in Hyderabad. SBI set up a 'by invitation' 4,000-sq ft branch, Kohinoor Banjara, to cater to Hyderabad's elite. The minimum opening balance: Rs1 crore.
The so-called 'crorepati branch' in the tony Hyderabad neighbourhood of Banjara Hills will offer frills that include personalised relationship managers, a round-the-clock locker facility, doorstep pick-up and drops.