He was responding to a question whether the introduction of the Nitaqat program, which could eventually bring down the numbers of Indians in the expatriate work force, would have an impact on the bank’s performance.

Hemant G. Contractor, managing director & group executive (international banking), said: “The process of Saudization is a continuing process and it will definitely have an influence … but we have opened branches in countries and cities where the numbers were skewed in favor of the locals and we have done very well. We hope to do well here to, and our bank will cater to both our community and the nationals.”

Contractor and A. Krishna Kumar, managing director & group executive (national banking), spoke to Arab News prior to the formal opening of the bank’s operations on Wednesday and the two managing directors were of the view that the setting up of the first branch in the Kingdom will go a long way in boosting bilateral trade between the two countries.

Contractor was optimistic with the launch of the Jeddah branch, saying the Saudi market is a growth driver for entire GCC and the historic trade relations between the two nations will throw up tremendous business opportunities for our bank.

“A slew of services are on offer on both sides of the balance sheet and beyond balance sheet as well. On liability side, innovative deposit products, besides vanilla items like savings bank, current account and time deposits. On asset side, project finance, syndication, SME lending, trade finance, etc. will be among the target products. We have a special product for remittances i.e. ‘SBI Super remit’ which is really super,” he said.

Contractor was circumspect when asked whether the bank was planning to open up branches in other main cities. “It is not in the pipeline for the moment, but we are definitely looking into it. The next branch in the Kingdom will come sooner…,” he said.

“We’ll make a call based on our experience here (Jeddah) and decide when to open other branches,” he added.

“Opening of branches in other places is on our radar, in near to mid-term, subject to the approval of the Saudi government and regulator (Saudi Arabian Monetary Agency).

On remittance service, Contractor’s stress was on the bank’s rupee remittance product "SBI super remit."

“It is very robust in terms of speed and convenience. Indians here are looking for fastest transfer, lowest charges and highest exchange rate for sending remittances to India. Our offering will address all these needs and therefore we hope to garner good market share in this space,” he said.

On the unique selling proposition for the planned operations in Saudi Arabia, Contractor said: “We would focus on corporate, retail and remittance business all under one roof, which is unique to our operations. Further, our robust technology platform, committed team, global experience and strong brand image will be the USP for our operations,”

“Our focus will be both on commercial and retail business sectors. We are pioneer in commercial and retail banking in India and with our huge experience and committed work force we are confident of excelling in these sectors in Saudi operation also. Large numbers of Indian companies have already invested/are looking forward to investing in the Kingdom. We would like to tap this business as a part of our strategy. Further, we are the only Indian bank having presence in Saudi Arabia which gives us additional edge for looking at businesses originating from India.”

He added, It is our endeavor that a substantial portion of the balance sheets of our foreign operations comprise local assets. Toward this end, we have set up a corporate banking wing in our Jeddah branch. Our branch will accord priority to lending to local enterprises and meet their needs from trade and project financing, syndication etc.

Contractor and Krishna Kumar were in the region to formally inaugurate two SBI branches — one in Qatar and the other in the Kingdom. When asked whether these openings are part of SBI’s Middle East expansion strategy, they said, with the opening of these two branches we are now present in five out of six GCC countries. With expansion in GCC we propose to mobilize a bigger part of the bilateral trade.

Contractor added, We are in this market now for over three decades. Our presence in the Middle East is multifaceted. We have wholesale operations in Bahrain, Dubai and Doha. Besides, we have full banking operations in Muscat, Bahrain and Jeddah. We have, in Bahrain, one of the largest Dealing Rooms in the Gulf.

On the challenges SBI expects from the local operations, Contractor said, despite global crisis, Saudi banks are doing well and both their top and bottom lines show marked improvement year-on-year basis. A strong bank in a sound economy will be able to face any challenges even in our Saudi operations. As a new player in the market, we have biggest challenge of attracting business into our books. With our global presence, brand image, committed work force, robust technology, innovative products, we are confident of overcoming the challenges from local banks.

Contractor, on the depreciation of the Indian rupee, said: “The weakening of Indian rupee against other foreign currencies, especially dollar, is not good for Indian government and importers. A depreciating rupee may compound the macroeconomic problems as prices of imported goods will surge and affect the current account deficit. India may not be able to take advantage even if commodity prices ease due to global slowdown.

“The ongoing rupee weakness is nothing to do with the domestic economy. Due to the up trending crisis in Europe, large banks, investors and financial institutions started selling euro and bought dollar, thus dollar appreciated against all major currencies including rupee.”

On the home front, Krishna Kumar reiterated the fact that NRI home loans is a generic scheme for all NRIs. “Ours is probably the best product in the market. Our retail office in Bahrain is arranging home loans for NRIs without NRIs visiting Indian offices. They have just to go to India to complete the documentation in respect of the loan. We propose to replicate it here in Saudi also through our Jeddah office subject to getting necessary regulatory clearances,” he said.

Krishna Kumar stressed that the difference in value proposition provides the competitive edge in an international market.

“In today’s financial market, product differentiators are minimal. They mostly look alike; cloned but costumed differently. Customers are intelligent. They make out the differences and similarities easily. Technology platform too is similar; the same core banking platform. And yes, market determines the price. So, the differentiator or as you put it, the competitive advantages remain with what value proposition you offer to the customers.

“For us, our strength lies in Indian Diaspora. Second our international network spread over 34 countries, third we are one of the Fortune 500 top international banks which indicates the strength of our balance sheet and most importantly, the fourth, a culture of modesty and transparency — we never over-promise and under-deliver. “

On the question whether there is any move to allow increased participation by foreign banks in India, Krishna Kumar said: “The RBI has pointed out that it had adopted a two-phase approach to “increase efficiency and stability” of the banking system in India. First, it would undertake consolidation of the domestic banking system, and second, ensure ‘gradual’ increase in participation of foreign banks in India. Currently there are approximately 34 foreign banks operating as branches in India. The approach of the regulator for allowing participation of foreign banks has been very cautious, particularly after the global financial crisis.”