The State Bank of India is foraying into the banking software market and setting up a call centre, to eventually compete with the likes of Infosys and i-flex, which offer banking software products.

India's largest bank last week got approval from the finance ministry and the Reserve Bank of India for setting up an infotech subsidiary. It is now drawing up plans for a joint venture with an Indian infotech company.

Big bytes

SBI has got finance ministry, RBI approvals for setting up an infotech arm The bank is planning a joint venture with a domestic infotech company Initially, the arm will act as a back office for over 14,000 branches, and will later develop banking software products

An SBI executive said the bank was looking for a partner and the company could be floated in the next three months.

The partner will manage the operations of the joint venture, while SBI will have representation on its board.

SBI's infotech subsidiary will act as the back office for over 14,000 branches. Later, it will develop banking software products.

The bank had submitted the proposal for clearance over two years ago, but the RBI and the finance ministry refused to give the go-ahead because they felt that it was not a core banking activity.

However, the present SBI management has been able to convince them that it is important for a bank of its size to be in a business that has the entire banking sector as a captive client.

SBI and its seven associates have begun to hook up their branches. In the first phase, which began in June 2002, a nationwide backbone is being built to connect 1,447 branches in 49 cities.

In the second phase, the group proposes to connect 2,929 branches, teller machines and other electronic delivery channels.