‘Credit growth revival top priority’
Being selected to head the country’ s largest ban kata time when the sector is passing through trying times, State Bank of India Chairman-designate RAJNISH KUMAR said his immediate priorities would be to revive credit growth and stressed asset resolution. The retail credit would drive the loan book expansion in near term, he said in his first media interaction after the announcement.
Being selected to head the country’s largest bank at a time when the banking sector is passing through trying times, State Bank of India (SBI) Chairman-Designate RAJNISH KUMAR said his immediate priorities would be to revive credit growth and stressed asset resolution. The retail credit will drive loan book expansion in near term, he said in his first media interaction after the announcement. Edited excerpts from a conference call:
What would be your top priorities as chairman?
Reviving credit growth and resolution of stressed asset are the topmost challenges. We are undergoing digital transformation in the bank, an initiative I have been leading as head of national banking group, and are preparing the bank for the future. Also, human resources development is another priority and we are in the process of revamping systems and practices in a major way. SBI is among the best places to work in India, along with companies like Google.
What are your goals and timelines?
There are short-term and long-term goals. In an organisation like SBI, which is very systemsand procedure-driven, activities are in autopilot mode.
I will review action plans which are already happening in the bank. This is time for pause. We have to see what is working, and what course correction is required. Then we will have a blueprint for at least the next 36 months. The short-term and long goals will be clearly delineated. This will be done in the next 30 days.
As the head of the national banking group, how many branches have you merged so far and what is the way ahead?
We are done with a major chunk of branch mergers. We have merged about 1,000 branches with nearby branches of SBI. And there may be 200-300 more that will be merged.
What is your view on RBI’s decision to link loan pricing to external benchmark rates?
We are studying the report and will give comments. The benchmark rate that is used should be applied to both — assets and liabilities. It can’t be a one-sided affair.
Any margins or net interest margins need to be sufficient to take care of the credit costs, which currently are elevated. Any change in methodology would be mean the pricing of asset and liability products would have to move in tandem. It is not possible to bring down lending rates without a cut in deposit rates. It is a delicate balancing act that the bank has to do.
We are committed to transparency. If we have any cushion to pass on benefits to customers, we will do it proactively.
How will you deal with the huge bad loans problem?
As far as stress in large corporates is concerned, each case is different. We will definitely review it on a case-by-case basis. It is a dynamic situation and if we feel the need for course correction in a particular case we will decide.
Will there be more sale of non-core assets?
We recently reduced some stake in our life insurance subsidiary SBI Life through the listing. There will be sale of non-core assets. We have small stakes in entities like the National Stock Exchange and Small Industries Development Bank of India. The bank will take a call on selling a portion of the stake. We are not looking at non-core assets sale as a major activity for now.
Going forward in the next two-three years, we may look at SBI Cards and SBI Mutual Fund. But, that is in the long term.
“SBI IS AMONG THE BEST PLACES TO WORK IN INDIA, ALONG WITH COMPANIES LIKE GOOGLE” “IN AN ORGANISATION LIKE SBI, WHICH IS VERY SYSTEMS- AND PROCEDURE-DRIVEN, ACTIVITIES ARE IN AUTOPILOT MODE” “THE BENCHMARK RATE THAT IS USED SHOULD BE APPLIED TO BOTH — ASSETS AND LIABILITIES. IT CAN’T BE A ONE-SIDED AFFAIR”