27 Nov 2013

The State Bank of India (SBI) will add to the dynamism of Botswana’s banking sector and widen the scope for consumer choices at a competitive cost.

Speaking during the inauguration of the State Bank of India(SBI) Botswana in Gaborone on November 26, the Bank of Botswana governor, Ms Linah Mohohlo, said the bank would also help widen the conduit for bilateral and multilateral trade in the region and with the rest of the world.

Ms Mohohlo stated that SBI was expected to lend financial support to the corporate sector which included mining entities and diamond related downstream establishments.

The bank, she said, would be able to draw on the knowledge and experience of its India-based headquarters, adding that increased lending to the corporate sector would enhance the share of credit to mining sector entities in general which in July 2013 was as low as three per cent and only one percentage point higher than it was in the previous year.

She stated that it was anomalous that an economy predominantly dependent on the mining sector, such as Botswana’s, has not seen a channeling of funds by banks to the sector to any significant degree.

Ms Mohohlo said the small, medium and micro enterprises (SMME’s) also stand to benefit as well as businesses engaged in international trade, particularly between Botswana and India.

The business orientation of the new bank she said should foster the development of enterprises in related sectors of the economy, which in turn will generate employment opportunities. She said the bank was therefore, advised not to follow the trend of lending predominantly to households.

In addition, she stated that in as much as providing credit to the household sector for consumption smoothing, mortgage financing was necessary. The current loop-sided credit distribution she said, does not accord with the norm. Conversely, banks she said tend to be averse to lending small, medium and micro enterprises (SMME’s) due to insufficient or absence of collateral.

Banks she said should put in place advisory units and robust risk management systems in a bid to mitigate credit risk, market risk and other operational risks, thus making it possible to lend more to SMME’s, instead of taking the easy way of lending to salaried employees and or holding Bank of Botswana Certificates.

Ms Mohohlo stated that banks should be supporting economic diversification by participating in syndicated loan facilities for large public-private joint ventures.

She further observed that as the banking sector expands, it was logical to expect a diversity of banking products and services at a reasonable cost, in part through increased competition.

Ms Mohohlo highlighted that it was a sound business strategy to invest in staff training, adding that Botswana has a small pool of bankers, and the pool was even smaller for those with world class banking skills, saying she welcomes the expressed commitment of SBI to transfer skills to Batswana.

The High Commissioner of India, Mr Madhaba Chandra said SBI in its current incarnation, provides an entire range of banking products, through its network of branches in India and overseas, including products aimed at non-resident Indians.

He said the establishment of SBI will give an added advantage to the common Batswana, saying he was confident that SBI will establish its branches all over Botswana. The Managing Director of and Chief Executive Officer, Ms Sophy Mathew said that they would not be lending to the household sectors rather, they would be lending to the corporate and diamond sectors.

Ms Mathew said the bank was not driven by profit as it was never their motive, adding that they have do not have any loss making branches. She noted that they have not poached any staff from any of the banks in India. She mentioned that India has 64 training institutions. State bank of India have 190 banks across the world and the Botswana branch is its 191st. ENDS