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WF: Mr. Khara, heartiest congratulations on your elevation to the position of MD - Associates and Subsidiaries at State Bank of India. This is indeed not just a great move for you but a feather in the cap for our industry! Can you please take us through what your new role will involve?
Dinesh Khara: Thank you very much Vijay. In my new role as MD Associates and Subsidiaries of State Bank of India, I will oversee all the associate banks of State Bank of India and also the non banking companies which includes SBI Capital Markets, which is our merchant banking company, SBI Mutual Fund which is our asset management company, SBI Caps Securities which is our broking company, our life and general insurance companies and our PD company. It's a role that encompasses all aspects of SBI's presence in the financial services space.
WF: This will also mean that you will be overseeing the merger of the subsidiaries into SBI which is one of the big moves within the Group.
Dinesh Khara: That's right.
WF: SBI MF has made huge strides in the 3 years under your leadership. Looking back, what would you count as some of the biggest hits and some of the significant misses over these 3 years?
Dinesh Khara: Our biggest hit I suppose will be the fact that we crossed the AuM milestone of Rs.100,000 lakh crores. I came into SBI MF in Nov 2013. In these 3 years, our AuM has doubled, which is a big hit - and one for which I will always remain grateful to our investors and our distribution partners. I am a firm believer in being fair to investors and it is very gratifying that they have reposed faith in us.
The other aspect which I will count as a big win is the balanced nature of our growth. We have managed to grow our equity book very sizeably in these 3 years. Our SIP book has grown very rapidly, which brings tremendous stability in flows. We had an objective of reducing the concentration of money market funds in our AuM, which we have achieved. We have today a very well balanced business, which is growing well across all verticals - and that is a big win.
In terms of the misses, one thing I think we could have done better is digital penetration in terms of transactions - particularly distributor aided transactions. I am a firm believer that if we have to take this product to the masses, we need a strong distribution network. And in today's world, the distribution network has to be digitally enabled. This is a major priority - not just for SBI MF, but for the entire industry. We need to ensure that our distribution network is digitally enabled with appropriate tools so that they can serve investors efficiently and in a scalable manner.
WF: Digital penetration is clearly an industry prerogative. What are some of the other things you believe we as an industry can do more of or better, to help us realize the potential that we believe this industry has?
Dinesh Khara: The industry I believe suffers a handicap of insufficient distribution. We have a great product, but we are not in a position to ensure its reach and access across the country. What matters most to a retail investor is good advice. Transaction execution comes after that. We have to collaborate across the industry for this. We need to digitally equip distributors to enhance their reach. We need to help them sharpen their advisory skills. If every distributor focuses on delivering good advice to his investors, nobody will be able to replace them. There is a lot of work still to be done on strengthening distribution for the industry.
Second area where I think we need more realization and collective effort is a clear acknowledgment of the fact that long term businesses are built only on the premise of ensuring a fair deal for investors. Whenever you complicate things for investors, you may get short term benefits, but you don't build a long term business, you don't build long term relationships. Those who still have a transactional approach need to consider long term relationships as a more sustainable and win-win model.
Third aspect is to take a leaf out of our SIP success and replicate it to create another growth driver for the industry. Today, our industry's SIP book is bringing in over Rs.3000 crores per month - which itself can continue growing to a much larger figure in the years ahead. Just as we have all worked together to create momentum for SIPs which essentially target savings from the young and middle aged investors, there is a big opportunity to work similarly together around the SWP concept - systematic withdrawal plans - to offer retirement income solutions for older investors who are looking for inflation-fighting retirement income solutions. We have the right solutions, we have the mechanism in the form of SWP - we need a movement like we did with SIPs to popularize SWPs and open up another big growth driver for the industry.
WF: What is your message to the IFA community as you move on to a much bigger role within the SBI Group?
Dinesh Khara: I wish them all the very best. I am very happy to see many IFAs focused on building long term assets, and would urge every IFA to emulate this. Retail investors in India are slowly developing an equity culture, and as this culture takes root, it will open up immense growth opportunities for all those who help put these investors onto this path. Growth potential is immense in the years ahead. I would urge IFA's to focus on good advice, get digitally equipped to serve their investors. Commit yourself to this and you don't have to ever worry about anybody displacing your role in your clients' financial lives.
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