Sberbank, Russia's largest lender, is poised for a significant expansion in India, with plans to channel its substantial rupee surplus into Indian government securities (G-Secs). This strategic move aims to address the issue of idle rupees accumulating in Indian banks due to increased trade between the two nations and limited investment avenues. CEO Herman Gref announced the bank's intentions during a visit to New Delhi accompanying Russian President Vladimir Putin for the 23rd India-Russia Annual Summit.
Sberbank, which currently operates two branches in India, intends to add ten more branches as bilateral trade diversifies and investment flows increase. The bank is seeking regulatory approval to convert its existing branches into a wholly-owned subsidiary within the next three years. Gref outlined a gradual approach to expanding the bank's presence, strengthening its B2B and B2C operations, introducing advanced technologies, and progressively entering retail banking. "We will start retail operations also, but we don't want to jump… in 10 years, we will become a normal bank,” he stated.
The bank's expansion will facilitate the deployment of Russian investments in India, leveraging Russia's multi-billion dollar trade surplus in rupees. Sberbank is a key intermediary in rupee-ruble settlements, processing an estimated 65-70% of Indian exports to Russia. Amid Western sanctions, Russian entities are actively seeking new investment opportunities for funds held in India, largely in rupee Vostro accounts.
In line with its expansion strategy, Sberbank plans to invest several million dollars in its Indian operations. This includes a proposed IT center in Hyderabad, in addition to the existing one in Bangalore. Furthermore, Sberbank is exploring collaborations to establish engineering schools in 20 Indian cities. The bank intends to invest approximately $100 million over the next three years to capitalize on the growing Indian market. This investment will support the expansion of its B2B business and entry into the B2C segment.
Sberbank is also building financial links for Russian investors, recently launching an instrument that allows retail investors in Russia to invest in India's Nifty50 index. CEO Gref emphasized that this initiative provides a good opportunity for Russian companies and individuals to invest in India, fostering greater interest in Indian companies. Sberbank has also secured a special license to facilitate gold exports to India.
The initiative reflects strong confidence in India's markets and deepens the financial cooperation between India and Russia. Sberbank's efforts to facilitate investments in Indian government securities will also be extended to other interested Russian investors. While the exact amount of rupees parked in the bank remains undisclosed, Gref acknowledged that it amounts to "a few billion dollars worth of rupees". He expressed optimism about rupee-ruble trade, noting significant improvements in transaction times, with 80% now completed in under 10 minutes, compared to weeks or months previously.
Sberbank's interest extends beyond traditional banking, with considerations for entering the education and healthcare sectors in India. The bank also intends to bring an IT system from Moscow, adapting it to India's specific regulations. Sberbank is actively seeking partners to introduce new technologies in high-tech industries, education, and healthcare. The company employs 900 people in India and anticipates further growth in the coming years. Furthermore, Sberbank is developing an in-house artificial intelligence (AI) infrastructure and intends to bring its AI competence to its Indian partners. Several Indian companies have already expressed interest in this collaboration.
