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Not to be left behind in the race with their private sector peers, public sector banks, including the State Bank of India, Bank of Baroda, Punjab National Bank and Oriental Bank of Commerce, are changing with times by tying up with private brokerage houses to provide online trading for their clients cashing in on the booming stock markets.
The latest to join the bandwagon was Bank of Baroda, which entered into an alliance with India Infoline Ltd launching 'Baroda e-trading' for providing brokerage platform to its 28 million customers, besides research and analysis services, last week.
Dr Anil Khandelwal, CMD, Bank of Baroda, said: "With this partnership, we can add significant value to the customer simply by leveraging our franchise. This will mark a major step in our initiative to offer wealth management services to our customers. Our customers will be able to transfer funds online and receive immediate limits against the same."
State Bank of India, which has the largest number of branches in India, has a similar tie-up with leading broking firm Motilal Oswal Securities while Union Bank of India has joined hands with Sharekhan by launching its Union Online Trading Services last year. It has 1.2 lakh demat accounts.
"This tie -up will help our bank to increase our deposit base, it brings revenues to our income base, we also have taken this step inorder to retain our customers." said a top official of Union Bank of India.
Trading with a bank is always convenient since the cash transfer in and out of the broking division is seamless and instantaneous. Investors also gain from having a link with their demat, trading and savings accounts. The electronic fund transfer acts as a bonus.
"The potential for online trading is going to grow as more and more customers will prefer to save in equity and equity mutual fund. Only 2 per cent of the household savings is invested the penetration of equity and it will certainly go up." said Kedar Deshpande, DGM, ICICI Web Trade.
"We have 11 lakh customers registered with us in the last six years," he added
Last November, Punjab National Bank entered into an agreement with IDBI Capital Market Services, a subsidiary of the Industrial Development Bank of India, to provide an advanced online trading portal to the bank's customers. IDBIpaisabuilder.in allows investing online in equities, mutual funds, initial public offers besides latest information and analysis.
Other banks that have jumped into the broking bandwagon are Oriental Bank of Commerce and Bank of India. OBC has tied up with ILFS Investmart while Bank of India is linked up with Asit C Mehta Investment Intermediates.
