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SBI in discussion with RBI for operational support subsidiary

June 27, 2022

SBI in discussion with RBI for operational support subsidiary
State Bank of India (SBI) has held discussions with Reserve Bank of India (RBI) for setting up a new subsidiary for operational support, Sources close to development told ET Now.

The regulator has given input to SBI about the structure of the new subsidiary and may consider giving approval after changes to the proposal. A new operational subsidiary of SBI will help in optimally utilising field forces, optimise revenues.

According to sources the lender expects to increase its revenue due to cost optimisation through the subsidiary, and expects to bring the cost to income ratio below 50%.

The bank has already received in-principal approval from RBI for setting up the subsidiary. This subsidiary is expected to provide support services mainly for agriculture, micro, small and medium enterprises, other micro loans, data entry operations, activities that can be undertaken as allowed for Business Correspondents, among others.

The support services provided to the bank will be subject to RBI norms laid down vide ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ and ‘Master Direction on Financial Services provided by Banks’.

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