It's time to take a breather and analyse certain stresses: SBI chief

Resolving stresses on the bad loans front, offering savings bank customers value-add in terms of life insurance and medi-claim, and increasing the portfolio of long-tenure loans are among the few tasks on the agenda of the new SBI top management, led by Mr Pratip Chaudhuri, Chairman.

After witnessing a high growth phase during former Chairman Mr O. P. Bhatt's tenure, it is now time for SBI take a breather and analyse certain stresses in the system, said the new Chairman.

The issue that warrants immediate attention is the slight acceleration in the NPAs on a comparative basis.

“We will take appropriate corrective measures to make sure that NPA percentages are better than the industry average,” said Mr Chaudhuri.

Another challenge facing the bank is to increase the deposit and advances growth, which has lagged a bit when compared to the industry standards.

“Quick numbers suggest that our topline growth, both in deposits and in advances, are just about what the industry is or maybe a per cent or two lower than the industry. We would like to assess this and take corrective measures as to why should topline growth not be the same as the industry,” Mr Chaudhuri said.

For improving its already high CASA (current account and savings bank account) base, the bank will look at offering value-added services with savings account such as life insurance and medical insurance and multi-city cheques.

“We have very little offering for savings bank customers. We cannot increase interest rate, so we would like to enrich our offering by bringing jumbo products. We will offer value in qualitative terms to savings bank depositors,” Mr Chaudhuri said

Long-tenure loans

To improve its interest income, the bank plans to focus more on longer tenor loans, as against short-term loans.

“On the loan side we feel that the short term loan market is too crowded. There are MFs, insurance companies, Commercial Papers, and NBFCs.

So, the returns from this market are very difficult because it is a competitive market. We would like to increase the tenor of our loans because we feel that the returns there have a direct relationship with the tenor,” Mr Chaudhuri said.

However, he pointed out, that these would have to be collateralised loans.

Amalgamation of Associate Banks

As one of the key architects of SBI's scheme of merging its associate banks, Mr Chaudhuri is certain that the amalgamation process will continue, but at a nuanced pace.

“We did a merger every two years because we had to give some time for absorption of the network and people. We are equally convinced about the need and correctness of doing that and will purse that. Now we have experience of merging one bank that was 100 per cent owned by us and one that had public ownership. A merger when completed does deliver value, synergies and does generate economies of scale without hurting the individual or depositors,” he said.

Branches

The bank, which was on a branch expansion overdrive, if it may be so called, did so in order to catch up.

“We were not well represented in the newer metros. That needed to be corrected. Now we will require to focus on quality of business in the branches that we open,” he said.

While the network expansion would continue, the bank will consolidate its branches so that they can function to their full potential.

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