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In the period between October 2008 to March 2009, when the world was going
through severe recession, that affected most of the economic sectors, but hit
the global financial services sector the worst; most IT vendors were not even
keen on discussing this segment. During the same period, the Indian public
sector banks together increased their IT investment by 27%, as compared to the
same period previous yearspending a total of Rs 1,671 crore (more than
one-third of a billion dollars) on IT to modernize their operation, says a
report on Trend and Progress of Banking in India 2008-09, released by Indias
apex bank, Reserve Bank of India recently.
These figures may just be a moral booster, if seen from the immediate context
of the tough conditions. But the highlight of this years study by RBI an annual
exerciseis something else. Finally, Indian public sector banks have completed
first phase of their modernization journey using IT which in RBI parlance is
referred to as branch computerization.
According to the report, as many as twenty out of twenty-seven PSU banks in
India have now fully computerized all their branches. Among the rest seven, five
are almost there. Only two banksPunjab & Sind Bank and UCO Bankhave some way
to go. While the former has managed to fully computerize only 13% of its
branches, the latter has managed to do that for a little more than half of its
branches, till March 2009.
Branch automation is, of course, not the end of it. But considering that more
than one-third of the 55,000 odd PSU banks are actually in rural areassome of
which do not even have proper roads and reliable electricityit is no mean
achievement. State Bank of India is a case in point. About two-thirds of its
11,000 plus branches are in rural and semi-urban areas. The fact that it was one
of the earliest among PSU banks to achieve 100% branch computerization means IT
has finally got into the DNA of these banks.
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PSU Banks: IT 1.0
According to the RBI report, between September 1999 to March 2009, all the
PSU banks together invested a total of Rs 17,897 crore, led by State Bank of
India, which spent Rs 4,290 crore on IT. While SBIs huge investment is a
reflection of both its size of operations, and its approach towards IT; in rest
of the list, there is not always a direct correlation between the banks size of
business and level of IT investment. For example, PNB and Canara Bankthe #2 and
#3 PSU banks respectively, going by their 2009 incomewere below Bank of India
and Bank of Baroda, when it comes to IT investments.
A useful way to look at this is how PSU banks stand in comparison to other
sectors in India. In Dataquest-IDC Top IT Users survey conducted last year, as
many as eleven PSU banks featured among the top fifty IT investors in India,
across all sectors. In comparison, only two private sector banks featured among
the top fifty IT spenders.
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