SBI begins life in the top 50 with a 15 bps base rate cut

After the merger of five associate banks and the Bharatiya Mahila Bank with itself, State Bank of India began a new chapter on Monday with 50 crore customers, total business worth ₹44.77 lakh crore and 43.55 crore savings bank accounts.

One of the first things the banking behemoth did was to cut its base rate by 15 basis points to 9.10 per cent, easing the equated monthly instalment (EMI) of existing borrowers, especially in the retail loan segment.

The merger of five associate banks and the Bharatiya Mahila Bank with SBI took effect on April 1. This catapulted India’s largest bank into the global league of top 50 banks.

Huge employee base One of the challenges for the bank would be the burgeoning employee base. The employee strength of SBI after the merger has increased to 2,70,011, which includes 69,191 employees from associate banks and BMB.

Only 2,800 employees of the five associate entities have so far applied for a voluntary retirement scheme (VRS) out of more than 12,000 who are eligible for it.

The other big challenge would be the asset quality with growing non-performing assets.

SBI Chairman Arundhati Bhattacharya, however, downplayed this, saying that the bank has voluntarily undertaken an Asset Quality Review in respect of all the common accounts (with the associate banks). In this regard, she said the State Bank group created more than ₹8,600 crore of additional provisions for these accounts.

“All common accounts have the same asset classification. All stressed assets, to the extent possible where we had common exposures, are aligned,” she said.

“We believe that even though the numbers will look bigger — obviously, because the balance sheet itself is bigger — we have a much better ability to resolve this going forward,” said Bhattacharya.

Asked whether her bank is ready to take over another public sector bank, Bhattacharya, in a lighter vein, said: “There is also something called indigestion. Let us digest these six banks first.”

She elaborated that the next bank was one-third of SBI’s size. So, the next bank should at least become two-thirds of SBI’s size before it thinks of getting bigger.

Staying close Bhattacharya emphasised that the bank would not lose sight of its customers. “Today, with the power of technology, we can address the customer by name for every transaction you do, and give you what you really require because we start understanding what you are doing on the basis of analytics.”

She underscored that customers would get a much more personalised look-and-feel of SBI over the next year.

“By July 2018, you will have a totally customised look and feel of every channel that you operate in — not only on your own internet banking channel but also at the branch. So, we are really working towards ensuring that we are able to personalise everything that we do for you — give you the kind of seamless experience that people really want.

“And for this, it was very important that we get the entire group together because it is very difficult to keep in step if you are six instead of one. So, to that extent also the merger is very timely,” explained the SBI chief.

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