March 28, 2017

Speaking at the Launch of SBI Card “UNNATI:Cashless India ki nayi soch”,New Delhi

Ashwini Kumarji, my old friend who has been on the board of State Bank with me when in the good old days when I was there, good old days not in the sense that the today is any worse off. Other Directors of the board of SBI Caps, Mr Rain Sene, Mr Sharma, Mr Barmala, all the other senior dignitaries, ladies and gentlemen. Today is Gudi Padwa, it’s the New Year. We have all been in celebration mode. Of course, with a few caveats, the Rajya Sabha did not run today, but it’s been a great day of new beginnings. It’s a day of new tidings, it’s the New Year when we are looking forward to something better in the life of this nation. And I think it’s so appropriate that we have launched the Unnati Card on this auspicious day. My congratulations to State Bank, to SBI Cards, to all of you, and I wish SBI Cards and this new initiative of Unnati great success in the days ahead. And I am sure this will, hopefully, become one of those days where we see transformational change happening. And in the next few minutes I am going to be a little demanding and possibly make Mr Jasuja pay a tax for inviting me here today. But thank you very much for giving me this opportunity to be here. You expressed gratitude Jasujaji, पर मैं तो अपनों के बीच आया हूँ, gratitude किस बात का? शायद बोर्ड में नहीं हूँ लेकिन मैंने कभी स्टेट बैंक का दामन नहीं छोड़ा है |

And, in some sense, this excellent performance that we saw, the cultural performance before the formal programme, which in fact, was the formal programme, the Card really got unveiled with that lovely number. Reminded me of the good old days when we used to have a lot of focus on cultural performances or cultural evenings whenever we had our bank board meetings or any celebrations at the bank. And I was thinking to myself sitting there that over the years I think life has become so clinical and mechanical and so busy that we have completely forgotten enjoying music, enjoying dance, enjoying the finer things of life, which actually help create a true balance in life. And I must compliment all the young artists who presented both India’s rich cultural diversity and within that the unity and integrity of this country so beautifully. A big thank you to all those young artists for really reigniting that spirit in us again.

We are in the midst of a new India, an emerging India, a story which is unfolding every single day there are new things happening, there are new decisions being taken, a lot is happening in the country. And this thrust towards digital technology, towards moving out from a cash economy into a more formal economy, and then within the formal economy into an economy which transacts digitally, transacts through banking channels, has been one of the most important programmes of the government led by Prime Minister Shri Narendra Modi.

The demonetization exercise, now about four and a half months ago, has yielded very significant benefits to the economy. We can clearly see the moving away from the formal sector of large number of people who want to associate with the formal sector. And I am delighted that State Bank of India with its big infrastructure across the country played a very important role in the re-monetization exercise all through November, December and January. And I am delighted that today, we almost find business as usual across the country in every respect, and I would like to through you madam express our gratitude all the state bankers who have been a part of this exercise.

Of course, when I talk of business as usual, I don’t mean that we should go back to the bad old days of the informal economy. I do hope we will see that change that was the thrust and focus of the demonetization exercise yield good results, good fruit to the national economy. Honorable Finance, Minister Mr Jaitley, has talked about the new normal where he’s spoken about how more and more people in the country now want to be a part of the new way of doing business, engage with the formal economy, see the merits and benefits of the formal economy. And, ladies and gentlemen, the entire effort to unify the Indian marketplace through GST, the Goods and Services Tax, would not have been successful but for this effort to try and bring the entire business chain into the formal economy, because in the days of past, money used to move out from the formal economy to the informal economy and then back into the formal economy almost seamlessly. So you really didn’t know when the money that you spent on a transaction moved out of the formal economy and when it came back in, so you could be spending money innocuously in a restaurant or a dhaba, but you were not sure whether that would get accounted into the system. So you didn’t know whether your hard earned tax paid money is going to genuinely remain in the formal economy or would somewhere along the line move out. And you didn’t know when the informal economy or money which was outside the tax-paid set up would creep back into the formal sectors, probably, through purchase of some jewellery or…

There were so many transactions which were keeping out of the tax net that India as a whole was not able to look at lower tax rate, was not able to look at a much more robust revenue collection to serve the poor of India. And I think this entire effort – (a) demonetization, (b) capturing where this currency was over the last many years, particularly, with the growth in large currency notes over the last 10-12 years, which had been phenomenal. The capturing of that into the banking channels and the encouragement that is being sought to be given to everybody to participate in the formal economy, to my mind, there is no doubt that in the days ahead, the GDP of the country, the economy, is going to vastly benefit from more and more people coming into the tax net, from being a part of the formal economy, and seeing the merits of recording their transactions honestly.

In that, the step of State Bank of India to offer a new product, the Unnati Credit Card, to the people of India I think is one more effort to engage more and more people to transact digitally, to transact through the banking system. And I am sure, in the days to come, this will help SBI Cards also take a quantum leap forward. Mr Jasuja was just mentioning about the 300 million customers of State Bank of India, I think with the merger that’s closer to 400 million now. And with a 400 million customer base, even though a 100 million of them are possibly the Jan Dhan account holders, hopefully holding a Rupay Card, I fail to understand why SBI Cards should be resting on its laurels that you have 15% of India’s card base with 4.3 million customers. That is something which to my mind is totally unacceptable.

If I was in your shoes, I would be benchmarking from the figure of 300 million and working backwards why are 300 million customers not on the SBI Card network. And that is what I think you should start looking at. You have a natural customer base waiting to be tapped and here you are struggling with 4 million and numbers of that kind. You offered a new product today, and I was thinking in my mind that it’s a great idea – anybody with Rs 25,000 in his bank account being offered a card without a credit history, in fact, this card will help him to create a credit history. Great idea, undoubtedly a good idea! Then why should you restrict it only to the State Bank of India deposit of Rs 25,000? Can we not think laterally and look beyond that? If I was in your shoes, and State Bank is the banker to every Indian, is that the tagline? Is the bank of the nation! I know my own wife, when I left my active business life and got into the role of a Minister and had to quit from all my businesses or income earning. And now I have to live on my interest income, because on the salary of a Minister, शायद मेरा घर एक हफ्ते भी नहीं चलेगा |

But then, my wife categorically told me that put all the money into State Bank, कोई और बैंक में पैसा नहीं डालना | That’s the trust that you have in the people of India. Now for you, you should be looking at expanding your horizon. Can I tie up with the Provident Fund organisation? Every Provident Fund holder of an account would have a certain reasonable amount of balance. If you tie up with PF and say that everybody who has a PF account with, let’s say a redeemable value of Rs 10,000 or whatever, could be eligible for a card. Issue him a card straightaway. Everybody who has a deposit in any bank account of any branch, of any of the PSU banks or even a private bank, attract him to you. Tell him you give us your bank deposit or an FDR receipt, give us a lien on that, take a card. Tie up with all the PSUs, we have tons and tons of them. I have a million people working in the PSUs under me. Give those million people, their wives, their children, their uncle and aunt, if he is taking the guarantee; give all of them a card. You straightaway can expand maybe to 4-5 million more customers.

Think laterally, think beyond the confines of where we are today and get out of this concept of 10% growth and 20% growth and 50% growth. We should look at a quantum leap. And our effort should be can we look at a 300% growth next year? Can we look at a 500% growth next year? That should be the aim of this company and this bank. After all, Prime Minister Modi, when he says, ‘it’s time that India leads the world and not follow the world,’ he’s looking at that kind of a game changing dimension. Otherwise, at the speed at which we were working, we would have taken electricity to the last 5 crore people, rather 5 crore families which means about 22-23 crore people in the next 100 years, at the speed at which the programme was going on. But when he told me to do it in 6 years, he very clearly meant he needs action. He wants a scale up which has never been seen before. When we discussed energy efficiency, we didn’t rest on a plan which said, ok, till 2014, 600,000 LED bulbs were being sold every year, if we do even 1 million-2 million-5 million, I could have reported 500% growth. But that’s not what we were looking for. So from 600,000 bulbs a year, the Prime Minister said we have to do 770 million in 4 years. I don’t even know the maths, even my chartered accountancy fails me.

I would urge you to look in that respect. After all, why should India not have 100% of the people holding a card in their hand? Some may have a Rupay Card, some may have a Unnati Card, some could have a Platinum or a Gold or whatever other cards you all offer. And, we all know there will be some delinquency, in fact, the delinquency is more in SBI Caps from whatever I remember of those good old days or bad old days or whatever it was. Because, probably, we are not quick on the uptake. You try defaulting from an HDFC card or an ICICI card, वह तो घर पे पहुँच जाते हैं सीधा money lender की तरह |

I know we don’t want to be rude. We don’t want to be ruthless or any of that. But we should be faster on our response time, on our action time, on blocking the card, ensuring that our risks are limited to a certain value. And then the exchange of information within the bank, within the banking system, within other credit card issuers, if that exchange of information can be good, which is also the need of the hour in the banking sector. I mean we should not be allowing in today’s digital age that a person defaults in one bank, merrily goes to another bank, opens an account and starts transacting there, possibly also enjoying bank loans over there. That’s what CIBIL and all of that was meant to do. I think we can devise robust mechanisms in this age where India provides information technology support to the rest of the world, I am sure we can do better within the country.

After all, the whole concept of Jan Dhan, Aadhar and Mobile – the JAM concept – is meant to take India to the next level of digital engagement and ensure that there is that 360-degree control on what’s happening in a person’s business or in a person’s life to ensure that he doesn’t default, yet, gets the possibility of service as much as possible, as quickly as possible and as efficiently as possible. So Jasujaji I am sorry if I have given you some thoughts which are out of sync, but I think the next time I come to an SBI Cards programme, I would love to see this 4.3 million atleast 43 million.

And I promise you, this government doesn’t have the luxury of time. हमारे को कितना अब 2 साल बाकी हैं हमारे term में, अगले चुनाव में जीत तब होगी जब SBI Card के 43 million customers होंगे | क्योंकि फिर मैं अपनी उपलब्धियों में भी बोलूँगा कि देखो सरकारी बैंक ने क्रेडिट कार्ड दिया बिना कोई charges के 4 साल के लिए | So I think that’s a great offering that you are giving. I would, of course, urge SBI Cards also, and I remember when I was on the board of Bank of Baroda had started this effort और State Bank में भी था तब मेरी उस टाइम से यह मानना था और जब अभी demonetization के दिनों में digitalization पे थोडा बहुत मुझे काम करने का मौका मिला तब मैंने बार बार कहा था कि हमको POS machines पे focus करना चाहिए | Merchant acquisition is the key to the success of this programme, sadly, we have not put enough effort on merchant acquisition. We have made merchant acquisition – (a) very complicated, (b) very expensive. And in the last, during the demonetization period I think we had provided that for Rs 100 a month, we will ensure that people get a POS terminal.

I think if I was in your shoes, I would think differently. I would put an SBI POS terminal in every goddamn store, every thelewala, every hawker, all across the country. You have nothing to lose. There is only gain. There is no pain. And with today’s costs on a POS machine and I had even offered the help of EESL, my company, which is known to drive down prices of LED bulbs from Rs 310 to the last order was some Rs 40 or something. So there is lot of possibility if you think of scale, but get out of these 2 or 3 companies only will provide a POS machines, what is all that? Let’s get 50 startups to come and start providing POS machines through the length and breadth of this country. There should be a startup in every district in the country – 600-700 companies – which should be servicing these POS machines, should be setting it up, calibrating them, keeping records. And again, with this technology in this country today, everything can be, in fact, monitored offline. Through my mobile apps, I can tell you everything in my whole 4 Ministries, right up to this moment. You ask me any question, and we have the media, maybe they can ask me at the end of this programme. I will tell you whatever is happening in the whole country, right now, it’s real time. Your data should also be all real time. You could actually tell a fellow that go on to the, on a mobile app and enter you want to see a pharma shop where an SBI Card is accepted, and Google Earth can take you there right now, which is the nearest pharma shop, which accepts an SBI Card. You could, possibly, be doing the same thing for SBI Buddy.

After all, why should private sector companies have had an opportunity to become larger than SBI on a simple thing like Mobile Wallets? Why should SBI not use BHIM and take it to the length and breadth of the country and have 400 million of its customers using BHIM app. It’s very much doable. And, once you scale it up to that level, then your costs can come down significantly. Sadly, our whole thinking is, ki no RBI allows us to charge 1% of the transaction so we are going to charge 1%. Why can’t we think of scale? Why can’t we think that ok, if we are doing a 100 million transactions, can we do 20 billion and bring down that cost to maybe Rs 2-3 per transaction, फिर चाहे एक करोड़ रुपये की transaction हो, 2-3-5 रुपये से ज्यादा क्यों लगने चाहिए?

Encourage people to use your platforms and the volumes will drive down costs, even if you have to for a short period maybe forego some returns, but engagement, after all, where does value get created? आप जितने internet companies हैं, जितने यह e-commerce companies हैं, इनकी valuation देख लीजिये, they are all making huge losses. Your private sector Mobile Wallet company makes losses of upward of a 1000 crores every year, then where does the $5 billion value come from? I don’t think SBI Caps would have a $5 billion value. Why no? When you have a parent who is so bestowed with so much opportunity, you should be giving us a $5 billion/10 billion/20 billion value proposition, what you will do in the next 7 days, what you will do in the next 30 days, what you will do in the next 3 months, how we are going to create value?

By the way, EESL, the company which did the LED programme, we didn’t start with the programme alone, we started with the proposition when will it be a billion dollar company. It was a company which did a turnover of 35 crores two years ago and our target is how quickly can we make it a billion dollar company. It’s possible. The limitation is in our mind. The question is, as the Prime Minister once said, that nowadays the only status that matters is not whether you are awake or you are asleep, whether you are online or you are offline. And I think all of you need to choose, is SBI Cards going to be a company which is awake to the opportunities? Is SBI Cards a company which is going to grasp every opportunity? Is it going to be in an offline mode waiting for things to happen or is it going to be in an online mode moving the needle, working passionately, serving the people of India through the length and breadth of the country and cashing this huge base that you have available in house to capture market share, to capture market opportunities.

Are we going to be able to say that India today has a value proposition in BHIM app, very soon in the Aadhar-enabled payment system put together, to my mind, can actually drive out everybody else in the world from this business and make India the leader of the world, make the world use our apps and transact, make the world look at India and Indian technology as the safest, surest and most effective and efficient way to transact. The jury is out Mr Jasoja. The ball is in your court and your colleagues’ court. I will wait and watch.

Thank you.



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