• SBI has already introduced this work from home policy in its 19 foreign offices
  • SBI will expand its digital banking platform Yono
  • Fitch credit rating agency revised its outlook for SBI to negative

India’s largest public sector bank, the State Bank of India, or SBI, said it will allow its staff to work remotely in an effort to prevent the spread of covid-19, reduce operational costs and improve employee productivity.

The lender, which employs 250,000 people, may consider working from home as a permanent option by unveiling a new “work-from-anywhere” policy.

SBI has already introduced this policy in its 19 foreign offices.

“With global acceptability of work-from-home arrangements, the bank is in process of upgrading its existing work-from-home policy to work-from-anywhere. Productivity tools and technology are already in place to perform administrative work remotely,” said SBI Chairman Rajnish Kumar.

The bank noted that work-from-home will reduce commuting hours and lead to better services to customers while allowing improved work-life balance for bank staff.

SBI assured that it will maintain physical branches where customers can go to in the event of emergencies and to support essential back-end services.

Ritu Singh wrote in CNBCTV18: “SBI is probably the first public sector lender to officially announce a larger acceptance of remote working as a permanent option. This, even as the lender said changing customer preferences could mean a big opportunity for a bank like SBI, as there is more acceptability to adopt digital channels for banking.”

Indeed, in order to encourage more of its customers to avail themselves of digital services, SBI will expand its digital banking platform Yono – with an eye towards doubling user registrations over the next six months. The digital platform will also offer end-to-end home loans, pre-approved car loans and personal gold loans.

SBI emphasized that rapid adoption of digital technology in response to the pandemic sets the bank for strong future growth.

"In a nutshell, the outlook on [the] bank's business and the economy will be conditional on time frame by which the virus is completely eliminated, and normalcy restored," SBI said. "[The] bank will also have to revisit its risk management framework, its internal models of risk assessment and capital planning and business procedures to better adapt to new operating environment.”

Some other major Indian lenders have also allowed an increasing number of their employees to work from home.

Aditya Puri, the managing director of HDFC Bank, India’s largest private sector bank with more than 100,000 employees, said that one-third of its workforce were working from home already and that this policy will probably continue even after the pandemic dissipates.

Rajesh Dahiya, executive director of Axis Bank, said his company will encourage a work-from-anywhere policy in order to cut costs and attract a wider variety of employees across geographical boundaries.

On the business side, SBI posted a very strong March quarter.

The lender recorded a March quarter net profit that increased fourfold from the year-ago period, despite India having entered the first phase of a national lockdown.

However, on Monday the Fitch credit rating agency revised its outlook for SBI – and eight other major Indian banks – to “negative” from “stable” due to the covid-19 pandemic. Fitch had earlier also downgraded India's sovereign rating outlook.

"The rating actions follow Fitch's revision of the outlook on the 'BBB-' rating on India to negative from stable on June 18… due to the impact of the escalating coronavirus pandemic on India's economy," Fitch said in a statement.

Fitch explained that the ratings of all nine Indian banks were support-driven and linked to India’s overall sovereign country rating.

"[Ratings] are based on Fitch's assessment of high to moderate probability of extraordinary state support for these banks, which takes into account our assessment of the sovereign's ability and propensity to provide extraordinary support," Fitch added.

With respect to SBI, Fitch said the giant lender "is highly likely to receive extraordinary state support, if required, due to its very high systemic importance.”