‘Credit growth is an unfinished agenda’

The four-year term of Arundhati Bhattacharya, first woman Chairman of State Bank of India, came to an end on Friday. Under her leadership, SBI catapulted to the elite group of top 50 banks in the world following the merger of five associate banks and the Bharatiya Mahila Bank with effect from April 1, 2017.

In a free-wheeling interaction with the media, Bhattacharya, who has served in the bank for four decades, shared her thoughts on a host of issues, including her future plans, reforms, asset resolution, outreach for farmers, and service charges. Excerpts:

Will you continue in the area of banking?

I don’t think I will continue in the area of banking. But obviously I am not just going to hang up my boots. In today’s day and age, 60 is too early. Of course, I am past 60. I forgot. But that doesn’t matter.

I think today, you know, there is so much of stuff to do. If you have the energy and the willingness to do it, I think, we can. So, definitely, I will be around, I will be active. I may not be directly in banking, but yes I will be definitely doing some things.

Is there any unfinished agenda?

There is never a position where you can say now my agenda is finished. Because what happens is you start with an agenda and as you go on, you keep adding to it. So, there will be certain unfinished pieces of business.

For instance, we were supposed to deliver on the digital front something that was really different. And that was supposed to be some time in July.

Now that has got delayed a little because the project’s scope has widened as we have gone along — we wanted to do this and we wanted to do that.

So, this is something which will get delivered to you within, say, the next month.

Now that is obviously an unfinished agenda. But it doesn’t matter because we have progressed a huge amount towards getting where we needed to get.

Similarly, there are various other pieces. For instance, today while we have done everything possible in order to improve our understanding of risk, our monitoring and mitigation of risk, of improving processes and credit underwriting standards, our follow-up processes, our monitoring, all of that, but at the same time, even today the credit growth is not where we want it to be. So, that is an unfinished agenda.

And I think the incoming Chairman (Rajnish Kumar) has already stated that it will be his agenda to take that forward and rightfully so….The fact is that the unfinished bits of what we have been working on will also definitely get worked out.

What is your take on the spike in bad loans after the merger?

The fact of the matter is you all (media) want big structural changes; you want big reforms; you want bold steps to be taken and then you expect that everything will be okay in 30 or 90 days’ time. It doesn’t happen.

Anything that is major in nature will take time for it to percolate down and give you the benefits. So, if you have certain amount of adverse numbers being reported in a 90-day time-frame, it is not the end of the world. It is the beginning of good times.

So, you will have to give time for any of these big, major things to settle down and for them to start giving the right kind of results. But if the steps being taken are right and done in the right way, then the right results will definitely come. It is a matter of time.

I feel today that we are there (at the bottom of the NPA cycle) and you should see good results coming. And, of course, whether it will be in this quarter itself or the next quarter, is still out there, I do not know.

But the fact remains that every other indicator points that way. And, therefore, we are quite confident that we are going to see an uptick in the economy sooner rather than later.

I think, today the system has been created for making that (asset resolution) happen. If you see the National Company Law Tribunal cases, the first 12 that we took over there, almost all of them are absolutely on the timelines that we had put for them.

So, there is no slippage in timelines in respect of the steps that were required to be taken for these major accounts…We have just begun to see the bids getting called. So, once the bids are called, then we take a call as to which appears to be the best bid. Then it is a question of getting the resolutions through.

So, I think, we are beginning to see light at the end of the tunnel. And in respect of the other cases as well, we will take a call by December as to what needs to be done and then take them forward.

And even there I think the execution will be similar and we don’t expect too much of time delays in that as well.

So, if that is the case, a major chunk of the NPAs that are lying in the system will obviously get resolved and that should be good for all of us.

Did back to back roll-out of demonetisation and GST impact the economy?

There was a thought process behind demonetisation and GST being brought back to back. One was for tackling black money and the other was for formalisation of the economy.

So, both, in some ways, were connected and therefore it was important to bring it one after the other. The fact of the matter is also that every government has a limited period of time in which to deliver.

So, in a limited period of time if everything has to be delivered then it is possible that reforms are brought in quick succession. When big reforms were not happening, the media was asking where are the big reforms (government was saying it will usher in big reforms but nothing was coming)?

But when the big reforms have been brought in, then you say it has happened too soon. This is not right.

Even in the case of our merger, which was a big exercise, it takes time to settle down. Everybody has resistance to change but it has to be done because that is the way everything is evolving.

So, you have to give it time to show what it can do and what could be the positive fallout. Whenever big reforms are brought in, there are short-term pains.

However, one should not ignore the long-term gains.

In case of demonetisation, lot of resources came into the system. That is what enabled us to lower the interest rates on loans. The second thing that has happened due to this is digitisation — three years of digitisation got done in three months.

About 290 per cent is the increase that we have seen in the use of digital channels. Not only that, during this period it has given rise to a lot of innovation.

What do you have to say about the strident opposition to MAB and service charges?

Even today our charges are lower than those of many banks. Barring SBI, all other banks had minimum average balance (MAB) requirement…if we feel that the public thinks that it (charges and MAB) is more, we are not afraid of correcting it. If the bank is not healthy then it will not be able to innovate, it will not be able to provide the services.

At any point of time, any model that we have has to be commercially viable. It has to be a sustainable model. For that there will be some charges. When you book a movie ticket online and its price jumps from ₹250 to ₹500, there is no hue and cry. We have to understand that there is an economic model for everything and that economic model will have to be carried out.

Not only that, if you look at SBI, ultimately this is a bank owned by the people of India. The government owns 60 per cent stake in the bank. Even if we make a little profit, it only goes back to the people via taxes and dividends paid to the government.

I am not taking anything home. We have no incentives, we have no bonuses, we have nothing. So, all that we are doing goes back to the people of India. We give a lot of credence to what people are saying about us. If we feel that the people are right, we will rectify ourselves, correct our mistakes….Unless we are providing value people would not be coming to us.

Can you throw light on the farmer’s outreach programme?

We require far better communication and outreach to farmers. NPAs in farm loans in the case of SBI in most of the States is currently lower than what they were in March 2017. The reason for this is that we have been able to reach out to them.

One of the biggest initiatives that the bank has taken is to create a farmer outreach programme for every branch in the rural area. In many States, our branches organise “ ratri choupal ” to talk to the farmers in the evening. In some sStates, these meetings are combined with puppet shows and street plays to explain to the farmers the advantage of taking loans from banks and paying them on time.

And actually speaking, it is having quite a good effect. In fact, the effect has been far superior to what we had expected.

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