Indian state-run banks 78 % computerised

By : |July 27, 2002 0

BOMBAY: India’s state-run banks, which account for three-quarters of the domestic industry by both deposits and loans, are rapidly computerising to better compete with tech-savvy private-sector banks.

The deputy chairman of the Indian Banks’ Association, V Leeladhar, told a financial industry IT seminar in Bombay on Friday that more than three-quarters of state-run banking transactions now are computerised.

“The overall percentage of the banks’ business (total deposits and advances) captured through computerisation of branches of public-sector banks as on March 31 2002 was 77.75 percent,” Leeladhar said.

He also said state-run banks are now computerising functions such as risk, forex and treasury management.

“Computerisation of these specialised areas has resulted in better fund management, higher profitability and reduced transaction costs.”

India nationalised all banks between 1969 and 1980. It reopened the industry to private banks early last decade, exposing the 27 state-run banks to competition from ICICI Bank and HDFC Bank and foreign entrants like HSBC, ABN Amro and Citibank.


At first, government-run banks took few steps to respond. But in recent years, industry leader, State Bank of India has led the state banking sector into the computer age.

In mid-May SBI announced it will spend Rs 1.5 billion over three years to more thoroughly computerise and link a third of its sprawling branch network, the world’s largest.

“To be successful in today’s competitive environment, it is imperative for financial services companies to embrace information technology,” NASSCOM Chairman Kiran Karnik, told the seminar.

Karnik said that NASSCOM believes public-sector banks should spend at least five percent of their annual operating budgets on IT.

According to NASSCOM, the number of fully computerised state-bank branches doubled to 11,578 in the 18 months to March.

Over 46,000 branches were networked by that point. The number of ATMs increased five-fold to just under 2,000.

Some 814 ATMs countrywide have been networked and there are state-run bank branches that offer Internet and phone banking as well.

Leeladhar said public-sector banks are now computerising, inter-connecting and networking branches offering forex services in 114 government-designated export zones.

Electronic Funds Transfer (EFT) is also available through 8,500 public-sector bank branches in 13 cities.

“EFT is a big boon to corporate clients, as it facilitates transfer of funds up to 20 million rupees per transaction between cities,” Leeladhar said.

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