[sbinews] SBI setting up regional processing centre (Business Standard)

  • From: "Rajendra S. Pai" <rajendra.pai@xxxxxxxxx>
  • To: <sbinews@xxxxxxxxxxxxx>
  • Date: Fri, 16 Jan 2004 09:13:07 +0530

SBI setting up regional processing centre
(Business Standard)
George Smith Alexander in Mumbai
Published : January 16, 2004

The State Bank of India (SBI) is in the process of setting up a regional
processing centre (RPC) in Mumbai.

This move will make SBI the first public sector bank to set up processing
centers. This will also enable the bank to convert its branches into sales

Till now, only private sector banks and foreign banks have been setting up
processing centers in the country.

In the public sector, Bank of Baroda is also in the process of setting up
RPCs by the year end.

SBI is also in the process of renovating its branches in the urban areas.
The plan is to make all branches have the same look and feel.

All branches of the bank - from retail to specialist branches for SMEs and
private banking - would also have a similar look and feel.

These processing centres do all the back-office operations of branches such
as account opening work, fixed deposits jobs, all generation of customer
materials like cheque books, pin numbers, ATM cards, processing of trade
services like letter of credits, bank guarantees, etc.

Private sector banks such as ICICI Bank, HDFC Bank, UTI Bank have been able
to go in for massive customer acquisition on the back of these RPCs.

In the first phase, SBI is planning a pilot RPC for its retail deposit
products which will cater to the Mumbai center.

Over a period of time this RPC would services four circles including Mumbai,
Ahmedabad and Bhopal catering to 600 branches.

In the intial years, the RPCs would cater to only branches in the metros and
in the urban areas.

Also it would kick off after the core banking solutions in these branches
are set up. The core banking solution will be implemented in 2600 branches
across the country.

SBI plans to set up at east four RPCs in North, South, East and West. It
also plans to set up different RPCs for retail liability, retail assets,
corporates and also for the SME sector. "This would encourage specialisation
and standardisation across the country. Also only around 2 per cent of the
time is used for sales and service with the remaining going for back-office
and administration work. The staff will now get a lot of time for sales and
service. Also the branch space can also be put for more productive usage
like setting up lockers etc," said sources.

The Mumbai RPC will be staffed by 500. The surplus people at the branches
would be relocated to the RPCs or for marketing jobs.

This whole restructuring and Business process re-engineering is also set to
contribute by a few hundreds of crore to the bottomline due to cost
effectiveness and lots of cost cuttings.

BoB is looking at setting up six RPC after the core banking solutions in the
bank kicks off. "There will be one centralised RPC for corporate while the
RPCs for retail and SMEs will spread across either region wise or zone
 wise," said BOB's chief technology officer V Chandrashekhar.

He added, " All the routine and repetitive functions would be taken out of
the branches and they will become more marketing oriented. This will also
help them in spending more time on the customers."

The bank has gone in for centralisation as much of their services in their
back-offices as possible. HDFC Bank has centralised account opening
activities including fixed deposits, all generation of customer materials
such as cheque books, pin numbers, ATM cards, processing of trade services
like letters of credit, bank guarantees.

"Also with telecom and technology we have the ability to centralise the
process. We cannot have specialist in each transaction sitting in our
branches. This would also need training cells. Also we needed some
standardisation across different branches. The group sitting in the CPU is
able to turnaround transactions as fast as those sitting in the branches. It
also gets in reducing errors as the people are specialised and also reduce
risks from a controls point of view. It also reduce costs as everything is
centralised, " he said.

The bank has central processing units in four regional centres across the
country. HDFC Bank follows a hybrid model of CPUs. For credit cards the bank
has only one CPU which is based in Chennai which takes care of all
end-to-end credit card needs from applicants to finally sending the card in
12 working days after receipt of the application.

An approval of auto loans now takes only 48 hours and personal loans 72
hours. Swaroop clarifies that this is the time taken for the documentation
even as the customer is told upfront on whether he would be eligible for the
loan or not. The time taken in processing a auto loans was between 5 to 7
days around four years ago.

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