Public sector banks have essentially been sleeping giants over the last several years when it comes to mutual fund distribution. Do you think that will change over the next few years? The network of HDFC Bank has worked well for it. PSU banks tend to have a much larger network.
Public sector banks have tremendous potential. Tomorrow, if State Bank of India decides to compete with HDFC Bank in this business, in the way we are doing it, let me tell you that although I come from HDFC Bank, we will not stand a chance. SBI can any time do a better job, given their relationship. But the unfortunate part is – fortunate for us, that it requires a mindset change.
Even in a bank like HDFC Bank, I know how difficult it was when we started off because I had people within the bank who would tell me that deposits will go away. Senior colleagues in the bank were of the opinion that if you are putting money into mutual funds we will lose our asset base.
I had to actually sit with them and do an analysis and explain that by offering all these functions, the current and savings account balance goes up.
So for the initial years we actually had to do a lot of presentations to our own staff and then use the stick and the ladder, the incentivisation and the famous or infamous foreign trips. All that had to be built in. That was possible because one could take those decisions independently.
The potential exists for a public sector bank. I am openly saying that if SBI decides to take it on like head-on, banks like ICICI Bank and HDFC Bank don’t stand a chance.
But I don’t see it happening. I don’t see it happening even in 2-3 years. A culture change is not easy and it requires a of lot of other things.
Though I hope they do it sometime for the good of the country.
