SBI teams up with Amazon

The big boy of Indian banking SBI has recently tied-up with e-commerce giant Amazon is entering the domain of the tiny, at least for now, the e-commerce zone.
SBI teams up with Amazon
The big boy of Indian banking SBI has recently tied-up with e-commerce giant Amazon is entering the domain of the tiny, at least for now, the e-commerce zone.
In tune with changing face of the economy, the State Bank of India which has been funding large projects is getting into what it calls seller financing. From the Reliances, Essars, and the Adanis, SBI is moving to fund transactions and seller's businesses on Amazon, Snapdeal and Paypal. In a report, PWC has stated that the e-commerce market in India should touch $22 billion by the end of 2015.
SBI, on Wednesday signed a memorandum of understanding with Amazon. The bank is set to ink similar agreements with domestic e-commerce players such as Snapdeal and Paypal, three people familiar with the matter told ET. The bank will hold a conference on Thursday in Kolkata.
"Today, we are in a digital age," said Arundhati Bhattacharya, chairman, SBI told media persons at a conference. "Giving people (customers) the best experience in buying and selling is what we are looking at. There are thousand ways to bring each other clients under this MoU."
"India SMEs have great products but they don't know how to sell. They should have better selling and buying...(options)," she said.
The bank sees it a multi-billion Rupee opportunity in the years ahead while the move is also aimed at securing its own asset quality.
This is because, small and medium enterprises or SMEs have significantly defaulted on their bank loans in the past few years as they were worst hit by the economic downturn. By tying up with e-commerce portals, SBI can help mobilise business for its SME clients. Those companies can obtain ready sale orders placed on e-commerce portals while they can also source raw materials at discounted rates.
"Facilitating SMEs to do their business will also help secure their loan repayments to us," Sunil Srivastava, deputy managing director (corporate strategy and new businesses), SBI told ET.
"SMEs are biggest contributor of employment generation (and these) entrepreneurships will aid the government's Make-in-India campaign," he said.
As of December end, the bank's non-performing asset or bad loan ratio was as high as 8.05 per cent for SME clients versus just 0.49 per cent for large corporate clients. SMEs shared 14 per cent of the lender's total loan book at Rs 12.65 lakh crore.
The bank plans to drive an awareness campaign for traditional customers, for whom online buying and selling is still taboo. SBI is exploring avenues to make retail customers increasingly shop online.
"The bank will determine how to reduce cash-on-delivery transactions on e-commerce portals, " Bhattacharya said. She indicated that SBI may look into its own payment mechanism for the same.
Accroding to PWC, India's internet penetration stands at connected households at 4.6 million versus China's 207 million. This alone shows that India's e-commerce penetration is way below the global standard.
According to Forrester Research, an independent technology and market research firm, only 16 per cent of India's total population was online in 2013 and of the online users only 14 per cent or 28 million were online buyers.
"The sector in India has grown by 34 per cent (CAGR) since 2009 to touch $16.4 billion in 2014. The sector is expected to be in the range of $22 billion in 2015, " according to a PwC India report.
 
As per a news piece in Et retail.
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