SBI to set up subsidiary to manage its real estate

NATION'S largest lender and market leader State Bank of India (SBI) has got in principle nod from the Reserve Bank of India (RBI) to set up a subsidiary that will look after the real estate of bank. Its role would be to frame and implement a uniform policy for all the real estate properties owned or rented by the bank.

Besides huge corporate office located in Nariman Point, the government-owned bank has over several zonal offices and local offices and 16000 branches...

across India. This has prompted SBI to set a subsidiary which will oversee all the real estate related requirement of the bank.

The bank has appointed accounting firm KPMG as advisor on the uniform policy and compliance the bank needs to put in place. "As of now there are 180 engineers working on various locations and around 900 of SBI officials are engaged in various real estate related requirement of the bank," a leading financial daily quoted a senior SBI official as saying.

"Once the new company is formed, it will enable SBI to rationalise staff, reduce cost and bring efficiency since all the real estate related activities will be centralised," he added. It will also enable the bank to uniform branch layout and have centralised sourcing such as painting the premises or purchasing air conditioners or furniture.

Earlier, the lender held two rounds of mega e-auctions for properties. The bank acquired such properties from borrowers following defaults.

The bank carried out first such auction in March 2015, which was, however, not a big success.

The bank also held separate auctions for retail (predominantly residential units) and commercial properties. This was first effort by the lender to hawk properties on large scale. While lender has been able to contain fresh slippages, it is struggling to dispose of distressed properties through auction.