SBI (Mauritius) Ltd, a subsidiary of State Bank of India, is a steady and strong player in the banking landscape of Mauritius with the aspiration to grow as a long-term stake holder in the Mauritian Economy. SBI (Mauritius) Ltd has been present in the beautiful island country since 1989, as SBI (International) Mauritius Ltd, focusing on Global Banking Business. Who else to speak about the bank than its MD and CEO, Mr Sudhir Sharma, who is confident about the growth of the bank? According to him, the Bank is poised to achieve a profit of around 15 million dollars in the current year.
The Parent Bank, State Bank of India, expanded its footprints in the economy of Mauritius in 2005, by acquiring a stake in Indian Ocean International Bank (IOIB) Ltd., which has had a good retail presence in the country since 1979. Nearly 70 to 75 percent of IOIB customers still trade with SBI, and we have acquired many customers through these existing customers. The policy has been to retain and get new customers through a professional and zero deficient policy.
On 25 October 2008, SBI (International) Mauritius Ltd amalgamated with Indian Ocean International Bank, and was renamed as SBI (Mauritius) Ltd. Over the years, SBI (Mauritius) Ltd has posted a healthy growth to emerge as a steadily growing mid-sized bank amidst the highly competitive banking environment of Mauritius and employing some 240 people.
SBI (Mauritius) Ltd has 14 Branches covering major areas of Mauritius, including Rodrigues Island, and 1 Global Business Branch at Ebene in Mauritius. Apart from the Branch Banking, customers also have the convenience of 24 x 7 ATM Banking at 20 ATMs across the length and breadth of the country. The Bank also has a 24 x 7 robust Internet Banking Channel enabling customers to work from their homes and offices.
The Bank operates in both offshore and domestic sectors offering products and services in Global, Corporate, Retail and Personal Segments. The products are competitively priced and have been designed while keeping in view the needs of different segments of society. The retails banking has grown from 25 million US dollars to 70 US dollars within 18 months. Cooperate has grown from 70 million US dollars to 200 million US dollars.
LMM: To what extent is the SBI established in Mauritius and what is the strategy for the next five years?
SS: The SBI Mauritius started its business in 1989 with its offshore banking. In 2004, we acquired a bank, the IOIB, and after that, we started into retail and the Bank has progressed a lot in both local corporate and retail business in the past couple of years. We have started entering in Africa through Mauritius and we had done strategy meeting with PwC on this. Because of Covid, this has been delayed for a couple of years, and we are still exploring possibilities. We are starting a financing financial institution based in Africa and very soon, we will be participating in large syndication related to Africa.
LMM: SBIML is engaging more and more in the digital pathway. Tell us more about it.
SS: Last year, we opened a YONO digital branch where the entire business is done in a paperless manner. We have recyclers where cash can be deposited or withdrawn by the customer and no manual banking work is done and the work is done in a digital way. We personally feel that in a future, the normal operation bank branches will change, everything will be in a very digital way. We are also promoting our Digital App, Internet Banking, debit card, internet transactions and we are geared to becoming a full fletched Digital Bank soon.
LMM: As per the financial statements of last three years, we witnessed a considerable growth in the profits of SBIML, is this sustainable for the years to come?
SS: SBI Mauritius always has the capacity of generating profit to the tune of 12 million US dollars per year. We had some stress in asserting our portfolio where we had to make huge provision in the past few years. For March 2020, we had a profit of 1.3 million US dollars which improved to 5.5 million US dollars in 2021 and last year, we had 12,6 million US dollars because the provisions requirement has reduced drastically. So, I am sure that the Bank is poised to attain a profit of around Rs 15 million US dollars in the current year, which is sustainable, as our average advances have grown by 100 million US dollars on YOY basis. Since the loan book has gone up and the cost of deposits has remained the lower, I am pretty sure that the Bank will continue to have this kind of growth and profits. So, the model is sustainable.
LMM: How are you ensuring that investors retain their trust in your Bank in Mauritius?
SS: We have 96 % holding by the Bank and 10 and half in retail segment. Our plan for the next five years, we go for the listing of the Bank on the local Stock Exchange and thereafter, to increase the value of stake holders, we propose to come out with an IPO. And if a Bank which is growing at a rate of more than 15 to 20 % in terms of business and in terms of profit, we have double in the past two years, I am sure that investors will show much more confidence and their investment in the Bank is likely to increase in the next five years.
LMM: After the pandemic of Covid-19, the global economy faces inflation and recessional fears among major economies coupled with Russia-Ukraine crisis. What are the immediate challenges for the banking sector in Mauritius?
SS: Banking sector, there could be some stress in assets, because after global inflation which all the countries are facing. In US, the inflation is very high, perhaps for the last four decades, they have not seen such high inflation. In countries like India, or any other countries of Europe, the UK, the inflation is very very high, so we cannot insulate the economy from rising inflation because example bound economy. Here, we have a continuous growth of tourism, and our income from the GBC portfolio continues to grow. After exiting the FATF, I believe the business, which routs through Mauritius, is likely to increase further and similarly, the inflow of tourists has improved significantly in the past six months, and we have that occupancy level is around 68 % to 85 %. So, the inflow of dollars remains quite normal and the Covid situation, I am sure that we will be able to control the inflation, as the government and the Bank of Mauritius have taken certain steps to reduce the domestic inflation. And the domestic inflation, we must appreciate that the government has contained it to a great extent and this how the economy can insulate itself to some extent from the globally rising prices.
LMM: GDP of Mauritius for 2021 was at 5.5 % and the forecast for 2022 is of 7-8 %, where do you think the actual growth will stand?
SS: I think, the government is likely to achieve the forecast made. We have that some economies, like India, which are doing very well despite Covid, production and the GDP in general is showing good progress. China is also likely to improve once they come out of the zero Covid strategy. And for most economies, because they are containing inflation, slight deviation is there from their growth as they are containing inflation. But, once, by June 2023, most of the nations will be able to control inflation and they will again be on the growth path. Mauritius is poised to attain a GDP of 7 % to 8 % with inflow of tourists, increase in GBC components, and there may even be some more investments coming in. Some after delegations, we have seen, EDB is taking to various countries to bring in new investors. This is likely to infuse fresh energy to the investment scenario of the country.
LMM: As per the recent National Budget, the finance minister announced that BOM would ensure that bank accounts should be opened within a week for individuals or businesses. What are your views on this?
SS: It was quite surprising to me. Banks should not take undue long time in opening an account. Once all the KYC documents for the people related account opening have been received, be it saving or current account, or business account, once we received all documents, there should be a turnaround time which should be reasonable. A 7 days’ time limit is considered adequate for the opening of an account. In fact, we have on boarded 3000 new accounts in the current year starting from April, il the last four months we have added almost 3000 new customer accounts. Our endeavour at our Bank is to open the account within 24 to 48 hours once the branches receive all complete documents along with the proposal. We have centralized the account opening process at head office level, and we ensure that the account should be opened within 2 days so that we remain compliant with the regulatory guideline of opening an account within 7 days.
