The State Bank of India has seen its international loan book grow relatively faster than the domestic loan book in the last quarter. India’s largest bank, which has overseas presence through 190 offices spread across 36 countries, expects this trend to push up the contribution of international business to 25 per cent of the overall balance sheet in the next three-four years from about 16 per cent now.

In an interview, A Krishna Kumar, Managing Director & Group Executive (Inter national Banking Group), offers, among others, insights into his bank’s overseas operations, the medium-term-note (MTN) programme, and what the revision in India’s outlook to stable by S&P means. Edited excerpts:

How are international operations shaping up for SBI?

As of June-end 2014, we had a balance sheet size of about $47 billion in international banking (IB) as against the overall balance sheet size of $300 billion. There is a lot of scope to grow the IB book.

In fact, if you see the growth in the asset book, it has been more, in terms of percentage (on a year-on-year basis), in the international book as compared to the domestic book.

Overall, there has been a slowdown in credit growth in the Indian side of the business but that slowdown is not visible on the international side. Having said that, it is also because there are lot of loans, which were approved in the past, that are now being drawn-down.

So, there is a pipeline which still has to be drawn-down. So, there is quite a reasonable chance of very good growth in the international loan book.

Some of the international business is India-linked. At least 60 per cent would be India-linked.

Then there is also the local business that we do abroad. We are also trying to do business in such a way that we, sort of, eschew our dependence on India-linked business and try to look for local businesses where we can also grow.

As of now, we are growing (international business) at 17-18 per cent. In three or four years’ time, we should be growing at 20-25 per cent. So, about a fourth of the bank’s balance sheet’s growth should come from the international book, that’s the way we are looking at it.

What does S&P’s revision of India’s outlook to stable mean for SBI?

I think, it is a very good sign that S&P has ultimately realised that the Indian economy is on the mend. It is on the rebound, and doing well or doing better than it probably was, maybe, a year back. Because all said and done there is some sort of control on inflation.

Though inflation is still perhaps a little high according to the RBI’s assessment, it is in much better control than it was at the same time last year. And GDP has also started picking up now. But then the IIP numbers are not very good, it can be better.

Overall, S&P has recognised that there is some improvement that has taken place in the Indian economy and perhaps the expectation is that it will get even better as we go ahead.

What this means is that the pricing which we can ask for our paper abroad could come down a bit.

So, are you ready to raise resources via the MTN programme?

We have an ongoing MTN programme (to fund overseas loan growth). There is a lot of room to raise additional funds abroad. But right now we don’t have any immediate necessity in the short run to do anything. But certainly we are looking at ways to raise more money abroad and we will do it at an appropriate time.

We have enough leeway to raise as much funds as we want. If we want to, we can easily raise a couple of billion dollars. It is not a big issue. There might be some need to raise funds in the next couple of months, maybe after November-December.

If the overseas loan growth is as good as what we have been seeing in the last few months there might be a necessity to raise some more funds abroad to fund it.

Also, the point is that the MTN funds that we raised four to five years back are now coming in for repayment. So, that has to be rolled over. That rollover will also happen in the next couple of months. The rollover amount is about $700 million or so. Even then we have enough liquidity to meet the expected loan growth.

What is SBI doing to grow its overseas balance sheet?

In many overseas jurisdictions we maintain good contacts with major banks so that we get participate in loan syndication, etc.

So, we are just trying to integrate into the community where we are and that we are doing reasonably well in the US, the UK, and Johannesburg.

Last year, in November, we opened a subsidiary in Botswana and are looking at business opportunities there as a lot of Indian companies are going for infrastructure development and that’s how we are participating in the local economy.

Related Topics
comment COMMENT NOW