SBI Chairman Says Investors Should Pay Up for Inclusion EffortsBy
Investors should pay a premium to own financial institutions that work toward stable, inclusive growth, State Bank of India Chairman Arundhati Bhattacharya said.
“There needs to be a rethinking from the point of view of investors as to what they are going to give a premium on and what they’re going to discount,” Bhattacharya said Wednesday at the Bloomberg Global Business Forum in New York.
The Indian government owns 57 percent of Bhattacharya’s company and requires it to pursue so-called inclusion initiatives that target poor or underserved communities. Some bank investors see those requirements as a profit drain. Yet the State Bank of India, India’s largest lender by assets, has developed platforms to meet those needs that reduced the cost of transactions to “probably the lowest anywhere in the world,” Bhattacharya said.
In one example, the bank offers a fingerprint-identification system that allows people without an address to gain access to the banking system. Those sorts of initiatives helped the State Bank of India open 107 million accounts that now hold $3 billion, and Bhattacharya expects they’ll be the source of transactions totaling $18 billion this year. About 97% of these accounts had no balance when they were opened, Bhattacharya said.