SBI plans tie-up with post offices to tap rural areas

NEW DELHI: State Bank of India, the country's biggest lender, plans to forge a partnership with India Post to use its network for providing credit and other services to expand its reach in rural areas.

"SBI is in talks to tie up with post offices to extend credit to the remotest villages of the country," Finance Minister P Chidambaram said on Monday.

Chidambaram was speaking in Lok Sabha during the debate on SBI Amendment Bill that replaces an ordinance for transferring RBI's stake in the bank to the Union Government.

If it fructifies, such an alliance will help in widening SBI's network substantially. The bank already has the biggest network in the country among commercial lenders with nearly 9,000 branches. After including its seven associate banks, the total branch network increases to around 13,000.

However, this pales in comparison to the network of India Post, which has more than 1.5 lakh post offices including a significant number in rural areas. Post offices offer a range of services such as savings, insurance, mutual funds, pension and domestic as well as international money transfer.

Chidambaram also said SBI's deposits have risen to more than Rs 4,35,000 crore during 2006-07 compared to Rs 3,80,000 crore in the previous year. The bank's advances rose to Rs 3,42,000 crore from Rs 2,67,000 during the period. He said the bank has increased lending to priority sector, farm and SMEs, while also reducing its bad debts.