The country's largest lender State Bank of India is actively looking to hive off its digital platform Yono into a separate subsidiary, its chairman Rajnish Kumar said. Yono or You Only Need One App is the lender's integrated banking platform.
"We are in discussions with all our partners to hive it (Yono) off as a separate subsidiary," Kumar said at an annual banking and finance conference—Sibos 2020, organised by the Society for Worldwide Interbank Financial Telecommunications (SWIFT).
After Yono becomes an independent entity, SBI could even become one among its users, he said adding that discussions were at a very nascent stage and a valuation exercise for the entity was pending.
Recently, Kumar had said that Yono's valuation could be around $40 billion.
"The statement (on valuation of Yono) which I made was that if I look at valuations of all start-ups and compare, then definitely Yono should not be less than $40 billion. As of now, we have not done any valuation exercise but that is what I believe is the potential," Kumar clarified.
Launched three years ago, Yono has 26 million registered users. It witnesses 5.5 million logins per day along with over 4,000 daily disbursals of personal loans and 16,000 Yono Krishi Agri Gold loans.
Kumar further said SBI is also considering setting up a digital payments entity under the New Umbrella Entity (NUE) framework for retail payments.
In August this year, the RBI had released a framework for authorisation of a pan-India umbrella entity for retail payments. The last date for submitting the application for the same to the RBI is February 26, 2021. "We are very seriously considering it. SBI can naturally lead the process by virtue of being the largest player in the payment space in the country. We are actively devoting our time and attention and will be in a position to take a firm view within the next few months but well before February 2021, which is the last date for applying to RBI," Kumar said.
At present, the National Payments Corporation of India (NPCI) is the only retail payment entity in the country. "Currently, the dependence is only on one entity. That is where RBI is thinking about more players which will bring in competition and innovation and ultimately benefit the payment system in the country," he said.
He said the pandemic has accelerated the pace of digitisation and the need for contactless banking has gone up. According to Kumar, footfall at branches has come down and there is a huge shift in the pattern of transactions.
"Seven out of 100 transactions happen only at branches. The percentage of ATM transaction, which was a very popular mode of transaction, has come down from 55 per cent to 29 per cent in the last three years," he said. Mobile transactions are going up and currently constitute about 55 per cent of total transactions, he said.
In the current scenario, the role of branches is to provide sales and after sales services and the percentage of transactions related services will eventually become negligible. He, however, said that for a country like India, the need for physical bank branches would remain as there is still a large segment of the population which is not comfortable with digital transactions.