SBIN.NS - State Bank of India

NSE - NSE Real Time Price. Currency in INR
+5.30 (+1.63%)
At close: 3:30PM IST
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Previous Close325.10
Bid0.00 x 0
Ask0.00 x 0
Day's Range322.10 - 331.80
52 Week Range244.35 - 373.80
Avg. Volume36,721,120
Market Cap2.949T
Beta (3Y Monthly)0.67
PE Ratio (TTM)24.03
EPS (TTM)13.75
Earnings DateJan 30, 2020 - Feb 3, 2020
Forward Dividend & YieldN/A (N/A)
Ex-Dividend Date2017-05-26
1y Target Est348.98
  • Reuters

    UPDATE 1-India's state-run banks report fraud of more than $13 bln in 6 months

    India's state-run banks reported fraud worth 958 billion rupees ($13.3 billion) from April to end-September of this year, the country's finance minister said on Tuesday, as the government struggles to help banks recoup losses. State banks reported 5,743 cases of fraud in the period, most of which had taken place over the last several years, although 1,000 cases worth 25 billion rupees had just taken place, Nirmala Sitharaman told the upper house of parliament. State Bank of India reported fraud of 254 billion rupees followed by Punjab National Bank of 108 billion rupees and Bank of Baroda of 83 billion rupees, she said.

  • India Imperils Foreign Investment With Telecom Cash Grab

    India Imperils Foreign Investment With Telecom Cash Grab

    (Bloomberg Opinion) -- For Kumar Mangalam Birla’s textile-to-telecom empire, adversity is a 100-year-old companion. In 1919, when the Indian businessman’s great-grandfather wanted to start a jute mill, the dominant British firm, Andrew Yule & Co., bought all the surrounding Calcutta land. The Imperial Bank, the forerunner of today’s State Bank of India, initially refused Birla a loan.(1)The government of post-independence India stymied the Birla conglomerate with kindness. Soviet-style planning and state socialism protected the family’s legacy licensed firms by keeping competition out. But they inhibited growth. Birla’s father, Aditya Vikram, went to Thailand, Indonesia and the Philippines because he wasn’t allowed to expand at home. “I for one fail to see where the concentration of economic power is: with the big business houses or with the government?” he wondered in 1979. Fast forward 40 years, and the 52-year-old current chairman of the group would be justified to reprise his late father’s frustration. The liberalizing spirit of the 1990s Indian economy has lost much of its force. After dismantling the license raj, a system of strict government-controlled production, and encouraging capitalism, New Delhi is gripped once more by a feverish statism that’s making Birla’s shareholders nervous. The slide began before Prime Minister Narendra Modi came to power in 2014, and was one of the reasons why businesses backed his call for “minimum government, maximum governance.” But five years later, relations between private enterprise and the government have turned even testier.Take telecommunications, the main source of investors’ anxiety. Ever since India opened up the state-run sector in the 1990s, the Aditya Birla Group has been an anchor investor. Partners and rivals like AT&T Inc., India’s Tata Group, and Li Ka-shing’s CK Hutchison Holdings Ltd. came and went, but Birla remained. Currently, the group owns 26% of the country’s largest mobile operator by subscribers, Vodafone Idea Ltd., with the British partner controlling 45%. An Indian court last month directed this bruised survivor of a nasty price war to pay 280 billion rupees ($4 billion) in past government fees, interest and penalties. Overall, India wants to gouge its shriveled telecom industry of $13 billion. The fund-starved government expects operators to cough up more at 5G auctions next year. How long can the Birla boss hang in? With Vodafone Idea saddled with losses and $14 billion in net debt, should he even bother?It’s doubtful whether partner Vodafone Group Plc will linger. This isn’t the first time it has been clobbered by unreasonable government demands. In 2012, India retrospectively changed its tax law to pursue a $2.2 billion withholding tax notice against the U.K. firm. Seven years later, that dispute is far from resolved, and the unit has now been slapped with a new bill.In its half-yearly earnings reported Tuesday in London, Vodafone fully wrote down the book value of its India operations, and warned that the unit could be headed for liquidation. Vodafone’s 42% stake in a separate cellular tower company in the country, once sold, will get used largely to pay off the loan it took to pump capital into the main telecom venture. After that, the U.K. firm will have a little over $1 billion left to support Vodafone Idea, according to India Ratings & Research, a unit of Fitch Ratings. However, the India business would be required to find $5.5 billion just for interest- and spectrum-related payments until March 2022.Will Birla step into the breach?Out of the Indian group’s 26% in Vodafone Idea, about 11.6% is held by Grasim Industries Ltd., and another 2.6% is owned by Hindalco Industries Ltd. Hindalco, among the world’s largest aluminum makers, is battling weak metals demand and a complicated takeover of the U.S.-based Aleris Corp. The bulk of the burden of a telecom rescue — should there be one — would fall on Grasim. It acts as a holding company for Birla’s cement and financial services businesses, apart from directly owning factories that churn out wood-based fiber and chemicals like caustic soda used in soap and detergent.Mumbai-based Emkay Global Financial Services says that in the worst-case scenario, where the government doesn’t back down and Birla refuses to fold his telecom cards, a rescue mounted by by Grasim could cost it 187 rupees per share. If Birla refrains from throwing good money after bad, the value of everything else Grasim owns net of debt is 1,126 rupees a share, or 47% more than the current stock market price. Clearly, the overhang of the Vodafone uncertainty is playing on investor psyche. Once the U.S.-China trade war stops making global textile markets jittery, fiber prices will firm. Grasim, in investors’ view, is better off spending $2 billion on new capacities in fiber, chemicals and cement than wasting any more money trying to salvage the telecom venture.The Indian government should see the folly of effectively turning the telecom industry into a two-horse race between Reliance Jio Infocomm Ltd., controlled by Mukesh Ambani, the richest Indian, and Bharti Airtel Ltd., which, too, is staggering under a mountain of debt. As IIFL Securities put it, bankruptcy of Vodafone Idea would hurt all stakeholders. Vodafone and Birla would lose control, the government would forgo $1.7 billion in annual spectrum revenue and banks would take losses on their $4 billion-plus exposure.Such an outcome would cast a serious doubt on the ability of private entrepreneurs to flourish, especially if they — like Birla or Inc. boss Jeff Bezos — happen to find themselves in competition with Ambani in a tightly regulated industry. Future investors will think twice. The rift between the government and business wasn’t Modi’s creation, but to allow the mistrust to turn into a chasm would be one of his administration’s gravest mistakes.(1) See, “Aditya Vikram Birla: A Biography” by Minhaz Merchant, Penguin India, 1997To contact the author of this story: Andy Mukherjee at amukherjee@bloomberg.netTo contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at©2019 Bloomberg L.P.

  • Reuters

    UPDATE 2-India approves $1.4 billion for fund to help stalled housing projects

    India's cabinet has approved 100 billion rupees ($1.4 billion) for a fund to help clear stalled housing projects, Finance Minister Nirmala Sitharaman said late on Wednesday. Sitharaman said the State Bank of India (SBI) and state-run insurance company Life Corporation of India will contribute an additional 150 billion rupees, taking the total size of the fund to 250 billion. The real estate sector in India has been hit by a severe liquidity crunch this year after a series of debt defaults by non-banking finance companies, also known as shadow lenders.

  • Did You Miss State Bank of India's (NSE:SBIN) 15% Share Price Gain?
    Simply Wall St.

    Did You Miss State Bank of India's (NSE:SBIN) 15% Share Price Gain?

    Low-cost index funds make it easy to achieve average market returns. But across the board there are plenty of stocks...

  • Golden Age Is Ending in India

    Golden Age Is Ending in India

    (Bloomberg Opinion) -- The world’s most important gold market isn’t what it used to be.Just a decade ago, India’s hunger for gold jewelry and bullion meant it accounted for about a quarter of global demand. Consumption has since fallen by about 24%. Ahead of Sunday’s Diwali festival, when purchases traditionally peak, imports in September fell to their lowest level in three years.Part of this is a reaction to short-term pricing factors. Buyers tend to stay away when the bullion price in Mumbai rises above about 30,000 rupees ($422.97) for 10 grams. Thanks to the rupee’s slump and the metal breaking through its long-standing $1,350-a-troy-ounce ceiling, it’s been in that territory now for the best part of two years, and is currently trading at 38,200 rupees.There are longer-term issues to worry about, though. About two-thirds of the country’s gold is bought in rural areas, where its traditional roles as investment and adornment are oddly intertwined. Rural Indians are far more inclined to buy gold jewelry than their urban counterparts, and tend to favor plain pieces that can easily be valued and traded in if money gets tight.That makes demographic changes a risk to the entire market. Rural population growth is grinding to a halt as people migrate to the cities and birth rates fall, shifting the focus of consumption spending. “Millennials in urban India are increasingly tempted by goods other than gold, particularly luxury fashion and smartphones,” according to a report by the World Gold Council, an industry group.There are also a growing number of alternatives to gold jewelry for those who want to save up for a rainy day. (In the case of rural India, the better term might be “a dry day,” as weak monsoons tend to tighten farmers’ cash flows and force them to pawn or sell.) Gold was originally popular as a store of value because banks weren’t available, but the share of rural adults with an account has soared to 79% in 2017 from 33% in 2011, according to the World Bank. A larger proportion of the adult population now has a bank account than in Hungary or Turkey.Considering the State Bank of India’s current 6.4% benchmark one-year deposit rate and inflation at 3.99%, a savings account is a far better way to protect your wealth against rising prices than a bangle. Even in deprived urban areas, alternative stores and sources of capital are opening up. About four million people in Delhi’s shantytowns will be granted ownership rights, the government said this week, a move that would help them take out loans to build houses.To be sure, the allure of gold can’t be wiped out by banking. Another reason that buying tends to be so vigorous in late October is that it’s peak wedding season. About half of India’s gold-jewelry demand is for the heavy pieces worn as part of a bridal outfit, according to the World Gold Council. Consumer spending, the other main leg of gold demand alongside investment (industrial uses are a distant third) will tend to rise with income, benefiting from the same urbanization that’s depressing purchases in rural areas.This year, however, consumers are a tough market to bet on. Motor-vehicle purchases, usually a good proxy for the public’s appetite for big-ticket items, are collapsing. Sales of cars, trucks and buses fell by more than a third in September from a year earlier, and two-wheelers were down 22.1%.The same pattern is borne out in broader data. The share of consumers who think their current economic situation has worsened and is set to deteriorate over the coming year was its highest since 2013 in September, according to the Reserve Bank of India. Perceptions of the job market are the worst in seven years of records. For the first time in four years of data, consumers think they’re spending less on discretionary purchases.India’s outsize role in the world gold market isn’t going to disappear overnight. Its consumers still account for more than one in six ounces bought globally.Still, this change in gold demand should be a warning to investors. For many years its role as a rural investment made India a downside buffer for the yellow metal, with farmers rushing in to make physical purchases whenever the price fell to levels that tempted investors to liquidate their positions.As the country changes, that dynamic is disappearing. While high gold prices still appear to put off purchases, consumption-focused urban jewelry buyers aren’t necessarily going to be around to prop up the market when it’s weak.Gold’s attraction for investors has long been its counter-cyclical tendencies. As this crucial part of the market grows more pro-cyclical, they’d do well to pay attention.To contact the author of this story: David Fickling at dfickling@bloomberg.netTo contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at©2019 Bloomberg L.P.

  • Largest Indian Bank’s Profit Beats Estimates on Bad Loans

    Largest Indian Bank’s Profit Beats Estimates on Bad Loans

    (Bloomberg) -- State Bank of India Ltd. posted a bigger-than-expected profit in the fiscal second quarter as asset quality improved. Shares jumped.Net income more than tripled to 30.1 billion rupees ($424 million) for the three months ended Sept. 30 from 9.4 billion rupees a year earlier, India’s largest lender said Friday. Analysts had expected a profit of 22.9 billion rupees on average, according to estimates compiled by Bloomberg.The Mumbai-based bank’s soured debt ratio narrowed to the lowest in at least a year even as the banking system contended with slow progress in resolving some of the big stressed accounts, such as Essar Steel India Ltd., business tycoon Anil Ambani’s group companies and Dewan Housing Finance Corp. SBI’s gross bad-loan ratio stood at 7.2% compared with 7.53% at the end of June.“Bad loans seem to be under control for the time being,” said Siddharth Purohit, a banking analyst at SMC Global Securities. “The bank has to keep the non-performing assets under control for another two quarters before investors can put that worry out of their minds.”“Provision coverage ratio of 62% creates a resilient bank, a strong bank. If I use the words safest bank in India I would not be exaggerating,” Kumar said. “The lines of the graph are moving in the direction they should be moving.”Kumar added that State Bank of India hasn’t yet accounted for changes in India’s corporate tax rates, which led to a one-off charge at Axis Bank Ltd. and a surprise loss. SBI will account for the tax changes “before March 2020” and move on to the new tax regime, Kumar said.Shares of SBI surged 7.3% in Mumbai, the biggest gain in more than a month. The benchmark index rose 0.1%.(Updates with chairman’s comment in fifth paragraph. An earlier version of the story was corrected to fix the currency conversion)\--With assistance from Russell Ward and Anto Antony.To contact the reporters on this story: Suvashree Ghosh in Mumbai at;Ronojoy Mazumdar in Mumbai at rmazumdar7@bloomberg.netTo contact the editors responsible for this story: Marcus Wright at, Jeanette Rodrigues, Alpana SarmaFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • SBI profit beats on higher interest income, better asset quality

    SBI profit beats on higher interest income, better asset quality

    State Bank of India (SBI) reported a three-fold jump in quarterly profit and beat market expectations on Friday as asset quality at the country's largest lender improved, sending shares up more than 7%. The Mumbai-based lender's performance is a bright spot in India's banking industry where weak loan growth due to a sluggish economy has compounded the near $150-billion bad loan problem. Earlier this week, Kotak said it was cutting its expectation for full-year loan growth.

  • Bloomberg

    Grab What You Can in India’s Bad-Loan Melee

    (Bloomberg Opinion) -- Snatch-and-grab is the new hallmark of Indian finance. As a banker friend in Mumbai put it to me only half-jokingly, a unit of "grabbed" cash collateral in hand is worth more than two units of hypothetical receivables. Yet this is no laughing matter. Not only is opportunistic behavior going to worsen India’s $200 billion-plus bad loan crisis, but now that everyone from the government’s sleuths to the courts are joining the melee, the ensuing chaos will limit the recovery for lenders and threaten depositors. Rajnish Kumar, chairman of State Bank of India, sat down for a chat with me at the Bloomberg Equality Summit in Mumbai this week. He had highlighted the problem last month by blaming what he called the selfishness of one bank for a default by Altico Capital India Ltd., a nonbank lender to property builders. When asked why his HDFC Bank Ltd. had choked Altico by helping itself to the money the shadow financier had raised elsewhere and parked with him, Aditya Puri, the managing director of India’s most valuable lender, replied: “What is out-of- turn? It is my security and I will exercise it.”Now the regulator, the Reserve Bank of India, will decide whether Kumar’s unhappiness is a case of sour grapes or if Puri did indeed cross a line. For State Bank of India, Altico is just one of the several instances where the taxpayer-funded bank has been at the receiving end.SBI didn’t drag tycoon Anil Ambani’s Reliance Communications Ltd. to an in-court bankruptcy process, hoping instead that Ambani would be able to sell assets to his brother Mukesh, India’s richest man, out of court. Ericsson AB, an operational creditor, pursued the opposite strategy and got itself a very decent court-enforced settlement by invoking the younger Ambani’s personal guarantee. More recently, SBI’s Kumar received a fresh blow when India’s enforcement directorate, tasked to fight economic crime, attached the assets of insolvent Bhushan Power & Steel Ltd. on suspicion of money laundering by its previous management. Both the new owner, who won control of Bhushan during bankruptcy, and Kumar, who’s waiting for his check, are impatient. Yet, thanks to the enforcement directorate, the $2.8 billion sale has now been put on hold by an adjudicating authority.ArcelorMittal, too, has also been waiting endlessly to conclude a near-$6 billion purchase of Essar Steel India Ltd., the most keenly watched Indian bankruptcy. There, Kumar and other creditors are facing a legalized version of snatch-and-grab: An appellate authority has held that rights of financial creditors like SBI are no superior to those of unsecured operational creditors.Finance 101 is being turned upside down in India. Take securitization. It got a bad rep during the 2008 subprime crisis, but the reality is that for India’s cash-starved shadow banks to survive, they must package more of their small-ticket loans into securities and sell them on to people like Kumar, who have a more stable source of funding: deposits. How hard is this? A court order is blocking the troubled Dewan Housing Finance Corp., which is seeking a restructuring of its $12 billion liabilities to Kumar and other creditors, from putting cash collected from homeowners into accounts from which holders of its mortgage-backed securities are paid. Six of these bonds were downgraded this week by Moody’s Corp. affiliate ICRA — three of them defaulted. These notes were supposed to perform for investors even if Dewan went bankrupt. Securitization will not lead to a safer financial system in India if this basic tenet is flouted. Small savers may not understand the nuances of high finance, but they’re the ones who feel the pain when a cooperative bank goes up in flames and the regulator puts limits on cash withdrawals. That’s what happened recently after a $1 billion fraud at Punjab & Maharashtra Co-operative Bank. The Reserve Bank is playing with fire. Imagine the consequences if, say, housing societies decide to move money out of smaller institutions and into too-big-to-fail SBI or HDFC Bank. Bailing out even small parts of a large deposit-taking industry will become a headache for Indian taxpayers. A capital-constrained economy like India can’t afford a jungle raj in finance. Only a set of clear rules can end the cash grab by powerful intermediaries and state authorities. Once powerless depositors join in the free-for-all, it will be too late.To contact the author of this story: Andy Mukherjee at amukherjee@bloomberg.netTo contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at©2019 Bloomberg L.P.

  • Reuters

    RPT-INSIGHT-Realty bites: Indian property slump leaves beleaguered banks exposed

    India might have thought the worst of a bad loans crisis was past, but a severe cash crunch in the real estate industry could augur fresh strife for its banks. A slump in the residential property market is leaving many builders struggling to repay loans to shadow lenders - housing finance firms outside the regular banking sector that account for over half of the loans to developers. With about $10 billion of development loans coming up for repayment in the first half of 2020, according to Fitch Rating's Indian division, the fallout could spread to mainstream banks that have lent money to the shadow lenders or invested in their bonds.

  • Bloomberg

    Paytm’s Founder Says Winning in India Prepared Him for the World

    (Bloomberg Markets) -- Vijay Shekhar Sharma, 41, founded closely held One97 Communications and its brand Paytm (rhymes with ATM) almost two decades ago. It offered a variety of digital services before moving into payments in 2014, just as millions of urban Indians began shopping online. Two years later, India’s banks created the Unified Payments Interface, a tech umbrella to help banks and fintech startups create services quickly, and the government eliminated high-value currency notes, turbocharging demand for Paytm’s services. Sharma, a self-described hippie who loves to sprinkle U2 and Pink Floyd lyrics into his conversation, now has backers including Alibaba’s Jack Ma, SoftBank’s Masayoshi Son, and Berkshire Hathaway’s Warren Buffett.Paytm is the market leader in India, where KPMG sees digital payments growing at the fastest rate of any country, with transaction value rising at an estimated annual rate of 20.2% from 2019 to 2023. But competition is heating up as Google, Walmart, and Facebook jump into India, wielding cashback offers to lure customers. Meanwhile, the government has proposed scrapping fees on digital payments, Paytm’s core product. In an interview in Delhi, Sharma described his career and how Paytm is adapting to India’s changing market, cutting annual expenses 45% and preparing to raise new funds to accelerate the next phase of growth in smaller cities.SARITHA RAI: What led you to digital payments and e-commerce?VIJAY SHEKHAR SHARMA: I grew up in a small town called Aligarh where I studied in a very basic Hindi medium school [where Hindi is the medium of instruction]. I didn’t have fancy schooling. I was lucky to get into engineering college in Delhi at the age of 15. I taught myself English by memorizing rock songs and simultaneously reading translated textbooks in English and Hindi. When I graduated, I was the youngest teenage engineer out of the University of Delhi. As the Pink Floyd song [Breathe] goes,Run, rabbit run.Dig that hole, forget the sun,And when at last the work is doneDon’t sit down it’s time to dig another one.For long you live and high you flyBut only if you ride the tideAnd balanced on the biggest waveYou race towards an early grave.My early heroes were internet entrepreneurs Jerry Yang and Mark Andreessen. I started One97 Communications in 2000 and began by selling content to users through telecom operators. By 2010 the smartphone became the distribution channel. Payment became our thing, and destiny was in our hands. In 2014 we launched our licensed wallet product. By 2015, Ant Financial had invested in us, then Alibaba and then SoftBank.A whole generation of internet entrepreneurs in India have small-town roots and hunger to build something significant and successful. My father was a schoolteacher. I had four siblings; there was no money to go around. I had to find ways to make money through weekend consulting jobs to set up computer networks for small businesses. At engineering college, I naively asked around [to find out] what the best-paying job is. Somebody said CEO. I didn’t even realize the person was being sarcastic. I knew the only way to get to be CEO was to build my own company. Looking back, I’ve never had a business card which said CEO. When I set up One97 Communications, my business card stated my title as EO. My engineering school buddy and one of my first employees, Harinder Takhar, also had the same title. We were both EOs.I couldn’t get to Stanford or Silicon Valley. Somewhere there was the urge that I should do something worthwhile, but I would have to do it in the Silicon Alley called Delhi. I wanted to build a great company; I wanted to attract the best talent. The internet age was calling. Paytm began offering people searches and went from there into business services, payments, commerce, gaming, content, financial services, and banking.“If you build in India, you can go build anywhere in the world. What do you think is the first thing an Indian kid learns? That the bus stop is not where the bus will stop”SR: Are you satisfied with what you’ve built so far?VSS: Many entrepreneurs are called “overnight success.” I say, “Yeah, my overnight was 19 years long.” We started in the dial-up internet era, where we ran up huge phone bills. We now carry the internet in our pockets. How far we have come! The last 20 years have been the most significant for India. It is an unprecedented kind of change the world hasn’t seen, not even in the U.S. or China. Nowhere else have such a large number of users come online in such a short period of time.SR: How will India’s digital payment transformation be different from China’s?VSS: China has two players. We will not have that kind of dominance. India will have four or five players, with a leader, which will have significant market share. Everybody can coexist. Payment is way too huge a problem for one or two players to control.India is far more competitive. We have neither the best talent nor the best infrastructure, nor the required levels of capital. We have to be far more resourceful. To raise money we have to take a flight out of India and explain our market to investors. Neither the Chinese nor the Americans have had to describe their market to their investors.SR: Is India changing?VSS: With low mobile data tariffs, the internet is reaching the corners of India. That’s spawning a huge number of startups in payments, cloud, and even startups that help people file taxes. There is a large local market. Risk capital is available to win the market. We are now grade-A entrepreneurs, not Third World businesses. It is possible to build a business to serve this country and then take it to the rest of the world. These are phenomenal days. Ten years ago, there was no local market, no risk capital, no internet infrastructure, no customers. When we started, it was the very beginning of the internet era of the country. I feel tickled that I am now bracketed with today’s young entrepreneurs of India, like Ritesh Agarwal of OYO [Oravel Stays Pvt.] and Bhavish Aggarwal of Ola [Electric Mobility Pvt. and ANI Technologies Pvt.]. Nobody remembers that I started with old-generation internet businesses.SR: Competition is building up in digital payments—Walmart, Google, and others whose launch is imminent.VSS: Rivals are spending huge amounts of money, but none of them have dented our market share. India’s digital payments market share is expanding. In the next five years, India will be a much more digitized country. That’s a good thing. As for rivals spending money, the big giants with the deep pockets never win the war. Microsoft didn’t win the search war. Search didn’t win the social war. Social didn’t win the messaging war.I can bet that none of the above is going to win the digital payments war. It’s a huge opportunity. There will be many players. This country could produce the payment player which will go on to dominate the world. It will be an Indian player, not a Chinese one. The payments leader of India will build a low-cost, highly scalable model in an extremely competitive environment. The winner here can go and win anywhere.SR: Why is cash still king in India?VSS: We’ve had the first phase of India’s digital payments journey with many world players as our rivals. We were the clear leader in the digital wallet phase.The second phase began with the United Payments Interface, which is the tech backbone linking banks and digital payments players so they can create services quickly and cheaply. Our rivals are using that backbone for person-to-person money transfers rather than merchant payments. Our business model is in merchant payments, in the everyday experience of users paying businesses. That’s our journey now.Less than 10% of payments made by users to businesses is through digital means. We believe merchants should provide their customers the whole range of options, and that’s what we offer through the Paytm wallet, which accepts cash, debit cards, credit cards, UPI-linked bank accounts, and other wallets. A digital wallet is far more inclusive. Even if a user doesn’t have a bank account, he can do digital payments.SR: When UPI was introduced, it seemed that digital wallets were going to die.VSS: In the early days, I had assumed that people would give up on the wallet after you could link a bank account and begin using UPI. But users are still uncomfortable with linking bank accounts. There is low penetration of digital money and low consumer trust. The pecking order in the country is: cash, followed by card, then wallet, and UPI.We do more than 600 million merchant payments a month. All UPI payments together are not even as big as our wallet transaction numbers. The whole UPI universe has 110 million registered users, but less than 10% of them account for more than 80% of transactions. On UPI, all apps put together have a $150 million monthly payments volume. We have a total of $390 to $400 million volume via Paytm through UPI, other wallets, cards, and cash. After spending billions of dollars, Google Pay and Walmart’s PhonePe haven’t been able to touch us.SR: How do you enlist merchants?VSS: It takes time. Shopkeepers need a lot of hand-holding for digital payments, cloud services, and everything else. They are underserved by tech companies. We are currently at 13 million merchants and will reach 25 million by March 2020. It’s all about how many cities, how many shops, how many markets give consumers the chance to use digital payments. We are very visible in India’s main cities. We are now headed to Tier 3 and Tier 4 markets.SR: To transition merchants to digital payments and other digital services can’t be easy.VSS: We are offering software where they can create their own store and start selling online. They can build their business’s credit score and access our instant business loans. We have leapfrogged from being a payment company to a complete ecosystem for small and medium enterprises for their software and financial-services needs. Our “Business With Paytm” app is in 10 languages. In this era of zero-margin digital payments, as mandated by the government, we have to make money on additional services such as financial services and cloud services.SR: Isn’t every digital payments service using cashbacks as a lure?VSS: Cashbacks are a good thing. They incentivize users and merchants to try out digital payments. Our cashbacks, by the way, are not in cash. They are in the form of movie vouchers, flight vouchers, and so on. Cashback is a strategy for us. We have pushed the Paytm cashback logo a lot more in the last few months.“If you build in India, you can go build anywhere in the world. What do you think is the first thing an Indian kid learns? That the bus stop is not where the bus will stop”SR: How have you innovated for users in the smaller towns and semi-urban India?VSS: We use a lot of data. Rich users don’t value the 20 rupee [28¢] cashback. Our engine understands who values the small sum of money. Our AI is built at Paytm Labs in Toronto. We started in 2014. We have the ecosystem advantage because we can be the one stop for many things. We introduced cancellation insurance for movie tickets. This is a global first. The cancellation value is extremely low, and our AI engine ensures that it’s an extra revenue earner.Here’s another example: India saves in gold. We allow users to buy infinitesimal amounts of the metal. For example, a user can buy gold for 11 rupees and aggregate. Buying gold is a wealth service we offer everyone. Our gold product has more customers than all wealth management companies in India put together. We have 17 million users.SR: What will it take to win India?VSS: Some people still want to pay by card—card transactions are the highest by value. Others want to pay by wallet because they do not want to link their bank account to third-party apps for fear of digital theft. As the market matures, all use-cases as a combined offering makes sense rather than just one. In the countryside, there’s huge fear they’ll get defrauded of their money. Soon as one system grows, fraudsters walk into that system. That is why we have a large investment in setting up a lab in Canada building fraud detection systems. We have 110 people there. We have been lucky so far. We have been working hard. For a payment company like ours, competition does not come from another payment company. It comes from hackers.SR: What’s the life of an Indian entrepreneur like? We had a tragic suicide recently of the founder of India’s largest cafe chain [V.G. Siddhartha], who described himself as a failed entrepreneur.VSS: In India it is particularly tough. Entrepreneurship is looked down upon, unlike in the U.S. We are just above Africa markets in terms of per capita income. We have to build a business model for that. Then there are many rules and regulations, sentiments, behavior.Siddhartha’s suicide is heartbreaking for entrepreneurs like me.You have to be far more Zen to survive in this country. As I said, if you build in India, you can go build anywhere in the world. What do you think is the first thing an Indian kid learns? That the bus stop is not where the bus will stop.SR: Is there an IPO round the corner? Some of the most high-profile companies backed by Masayoshi Son, such as Uber, have gone the IPO route.VSS: Masa has never mentioned the word IPO to me. We will remain private for the next two or three years for sure. I look up to Warren Buffett, Masayoshi Son, and Jack Ma. Their ambition is to build huge impact on their markets, cities, countries, business domains. They are all market share-centric. What I take from them is: First, learn to do one thing really well. Then build the next level of business on top of it. That’s the common thread. We’re not even on the preparation journey for the IPO, which itself takes a couple of years.SR: Then are you looking to raise funds?VSS: There is a huge amount of incoming investor interest. People with large-dollar checks are knocking at our doors. Once we figure out the business requirement and get the necessary board OK, we will raise money. We are very well-capitalized for our business model.SR: Where is Paytm headed in the next few years?VSS: Paytm is [dominating] and will dominate India’s mobile payments ecosystem. Paytm Payments Bank has overtaken India’s No. 1 mobile bank, state-owned lender State Bank of India. Just like Ant Financial dominates payments in China, Paytm wants to dominate in India. We are getting into insurance and lending. We’ve created world-class tech that can be replicated both in emerging and developed markets. We built payments from the bottom up in Japan with Made in India technology. PayPay [a joint venture among Paytm, SoftBank, and Yahoo Japan] today has 10 million customers. We will go to the Americas and Europe.Rai is a reporter covering technology for Bloomberg News in Bengaluru.To contact the author of this story: Saritha Rai in Bengaluru at srai33@bloomberg.netTo contact the editor responsible for this story: Christine Harper at charper@bloomberg.netFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • Bloomberg

    Bank Mergers Are No Silver Bullet for India

    (Bloomberg Opinion) -- With every passing day, India’s economic indicators are turning a little bleaker. The situation is bad enough to warrant using the word “crisis,” arriving just as the government’s fiscal ammunition is spent.The announcement Friday of 5% GDP growth in the June quarter showed the economy growing at its weakest pace in six years. On Sunday, the top six carmakers reported a 29% drop in August sales, stoking fears that the slowdown could get still worse.  The 982 billion rupees ($13.7 billion) collected in August via the goods and services tax, the main tax on consumption, was the smallest in six months. This adds pressure on the central bank — both to cut its policy rate and to ensure that commercial lenders pass them on to borrowers. To the extent that the more inefficient state-run banks are a drag on credit, New Delhi said Friday that as many as 10 of them will be merged into four.Whether folding one weak bank into another will make the combined entity any stronger remains to be seen. What’s clearer is that these lenders will spend the next six months on integration. Putting their balance sheets to work may take a backseat. Pending consolidation, the lenders might also be hesitant to issue new bank guarantees, especially to private-sector bidders for road projects. Thus, one of the few areas where there’s new investment may be affected, especially with a sharp rise in debt levels of the government agency that gives out the contracts. A hefty injection of 552.5 billion rupees of taxpayers’ money into the merged banks will only help them provide for the bad loans that will get lumped together. Capital for growth remains elusive. State Bank of India, the largest lender, will require 150 billion rupees in the current fiscal year, according to ICRA Ltd., an affiliate of Moody’s Investors Service. The benefits will only be evident in a few years. The new round of consolidation will bring down the number of state-run banks to 12 from 27 just a few years ago. These lenders will have no choice but to become more competitive because they’ll have to price consumer loans by linking them to the central bank’s policy rate. Since they aren’t very good at lending against cash flows, the government wants them to originate loans together with non-bank financiers. Currently, even the shadow banks are stressed. Over time, though, this should help boost the underwriting standards of state-controlled lenders. Credit flows to smaller firms, which supply goods and services to larger companies, will improve. Making the most of vendor finance will require plugging India into global supply chains first. By offering the likes of Apple Inc. and Ikea less restrictive access to its billion-plus population, New Delhi is hoping for long-term sourcing wins from the rapidly deteriorating trade relations between Washington and Beijing.But while taking much-neglected steps to position India as an alternative to China is a welcome move, the gains won’t be immediate. Before committing to a new factory in India to both sell locally and to export, investors will want to see steadier final demand in the domestic economy. Maruti Suzuki Ltd., the nation’s biggest carmaker, is struggling to push out 100,000 cars in a month to dealers ahead of the festival season. That isn’t exactly a great advertisement to dangle before new entrants.  Good things will come from all the tinkering – just not now. Weakening global growth means India can’t even use a weak currency to export its way out of trouble. This isn’t the time to talk loudly about wanting to become the next China. A hawkish Washington won’t want to see mercantile strategies being deployed by yet another large labor-surplus nation. Prime Minister Narendra Modi’s best hope will be to use the crisis to mend his government’s frayed relationship with the private sector. Giving startups a reprieve from a seven-year-old law, one that was used by tax authorities to harass them with impunity, is a good move.Admitting that there are design flaws in the consumption tax and fixing them — perhaps by bringing separately taxed petroleum products into its ambit — should be the next step. Like with the bank mergers, the gains will take time time to become evident, even as the pain gets visibly worse.  To contact the author of this story: Andy Mukherjee at amukherjee@bloomberg.netTo contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at©2019 Bloomberg L.P.

  • SBI's credit card business aims to raise $1.1 billion via IPO: source

    SBI's credit card business aims to raise $1.1 billion via IPO: source

    SBI Card & Payments Services Ltd, the credit card subsidiary of State Bank of India (SBI), plans to raise about 80 billion Indian rupees ($1.12 billion) via an initial public offering this year, a senior SBI executive involved in the process said. SBI and SBI Card did not immediately respond to requests for comment. At the end of March 31, 2019, SBI Card, which is 74% owned by SBI and 26% by U.S private equity firm Carlyle Group, had total assets worth 195.93 billion rupees.

  • Reuters

    SBI's credit card business aims to raise $1.1 bln via IPO - source

    SBI Card & Payments Services Ltd, the credit card subsidiary of State Bank of India (SBI) , plans to raise about 80 billion Indian rupees ($1.12 billion) via an initial public offering this year, a senior SBI executive involved in the process said. SBI and SBI Card did not immediately respond to requests for comment. At the end of March 31, 2019, SBI Card, which is 74% owned by SBI and 26% by U.S private equity firm Carlyle Group, had total assets worth 195.93 billion rupees.

  • State Bank of India cuts benchmark lending rates by 15 bps

    State Bank of India cuts benchmark lending rates by 15 bps

    State Bank of India (SBI), the country's largest lender by assets, on Wednesday cut its benchmark lending rates by 15 basis points across all tenors, shortly after the central bank slashed interest rates by a larger-than-expected 35 bps to boost the economy. SBI's one-year marginal cost of fund-based lending rate, or the MCLR, will come down to 8.25% per annum from 8.40% earlier with effect from Aug. 10, SBI said in a statement. The Reserve Bank of India (RBI) cut interest rates for a fourth straight meeting in 2019, taking advantage of mild inflation to expand its effort to boost an economy growing at its slowest pace in nearly five years, but there have been concerns over speedy transmission of these cuts to the economy.

  • Reuters

    UPDATE 3-India's makes unconventional rate cut in bid to spur growth

    The Reserve Bank of India (RBI) lowered its benchmark interest rates for a fourth straight meeting on Wednesday with a slightly bigger than expected cut, underscoring its worries about India's near-five year low economic growth pace. The six-member monetary policy committee (MPC) cut the repo rate by an unconventional 35 basis points (bps) to 5.40%, just above a 25 bps cut predicted by 80% of the 66 analysts polled by Reuters last month.

  • Reuters

    State Bank of India seeks bids for Videocon's overseas oil, gas assets

    The State Bank of India has invited bids for overseas oil and gas assets of Videocon Industries Ltd, a newspaper advertisement showed on Monday, as India seeks to recover billions of dollars in loans from the beleaguered private firm. Consumer electronics firm Videocon Industries is one of the most indebted companies in India, with outstanding loans worth around 600 billion rupees ($8.53 billion) from its financial and operational creditors. In October, SBI Caps, the investment banking arm of State Bank of India, was appointed to start the process of valuation and monetisation of the firm's oil and gas assets overseas.

  • State Bank of India warns of muted credit growth, misses quarterly profit estimates

    State Bank of India warns of muted credit growth, misses quarterly profit estimates

    MUMBAI/BENGALURU (Reuters) - State Bank of India (SBI) joined its peers in flagging concerns about tough domestic economic conditions and the stress the auto sector is under, as the country's largest lender by assets missed expectations for quarterly profit. Rivals HDFC Bank Ltd and ICICI Bank Ltd too have warned of the negative impact of India's ongoing economic slowdown, with a slump in auto sales cropping up as a major pain point. Mumbai-based SBI has an exposure of 115 billion rupees to auto dealers, Chairman Rajnish Kumar said during a post-earnings conference call on Friday, but clarified that there was no risk of concentration of stress.

  • Reuters

    Morning News Call - India, July 30

    State Bank of India has tightened lending terms dramatically for auto dealerships, according to a source and an internal memo seen by Reuters, seeking to reduce its exposure to risk from a sector in the midst of a sharp downturn. India's market regulator on Monday proposed tighter disclosure rules for shareholder advisory firms known as proxy advisors to avoid conflicts of interest. The State Bank of India cut interest rates on deposits across all maturities on Monday but analysts said it would take time for the country's largest bank to make matching cuts in its lending rates.

  • Jet Airways' lenders approve interim finance plan for the carrier

    Jet Airways' lenders approve interim finance plan for the carrier

    Lenders to Jet Airways agreed on Friday to provide some interim financing to the bankrupt airline to help it cover legal and other costs, as resolution experts look to find a potential buyer. In a regulatory filing, bankruptcy resolution firm Grant Thornton said Jet's lenders had also approved the eligibility criteria for potential buyers. The filing did not say how much interim funding had been approved, but a source familiar with the matter told Reuters the lenders had agreed to provide $10 million.