New Delhi: State Bank of India (SBI) has now engaged McKinsey & Co to advise it for building bank’s rural business and has paid a total of Rs62.8 crore to the global consultancy firm since 2007 for various advisory services.
The bank had kept in abeyance a project given to McKinsey & Co “due to operational reasons” in 2007 but resumed the services of the consultant in March 2010.
“SBI had engaged McKinsey & Co as consultants in January, 2007, for a period of four months for building bank’s rural banking business. However, the engagement was temporarily put in abeyance after some time due to operational reasons,” minister of state for finance Namo Narian Meena said in a written reply in the Rajya Sabha on Tuesday.
The bank has engaged McKinsey & Co in March 2010 for a period of 4 months to resume the engagement of 2007, he said.
During this engagement, the consultants will advise the bank on issues, which include review of rural strategy, revised channel strategies to outreach, key partners to target, technology plan, business plan, organisational redesign etc, he said.
For the current engagement, he said, SBI would pay a fee of Rs3.42 crore plus expenses capped at 10% and tax at applicable rates.
Payments would be made in stages on successful and timely completion of deliverables, the minister informed.
The bank had paid a consultancy fee of Rs9.99 crore to the US-based McKinsey & Co in 2006-07, the minister said, adding, the company was engaged in 2007-08, 2008-09 and 2009-10 and was paid a total of Rs62.71 crore.
The consultancy firm Price Waterhouse engaged in 2006-07 was paid Rs1.04 crore for providing advice on certain issues to the country’s largest bank while Ernst & Young was hired in 2008-09 and paid fee of Rs1.31 crore.
Meena further said as per the autonomy package by the government in February 2005 for public sector banks, the bank boards are competent to decide on the operational issues of the bank.