We will focus on strengthening associate banks before merging them: Arundhati Bhattacharya

Is the merger of associate banks on the radar?
Not at this point of time. First the focus will be to make them strong banks in their own right. We would like to see how much of efficiencies can be brought in before merging them. Then we will rationalise them and see that the branches have a better reach. In the next 12 months we will be focusing on them and then we will be able to merge them very quickly. There is no order laid down for merging associate banks. When we merge we will do it more for the sake of strategy.

Are you selling only 10% stake in SBI Life to BNP Paribas? If valuations are good, will the bank sell more stake?
At this stage, we are looking at a 10% sale, for which we are getting the valuation done. We have to get it properly valued. The valuation will take longer than earlier expected as the insurance regulator has come with the bancassurance model which will also impact the valuation. They anyway have the first right of refusal. The funds from the stake sale will be ploughed back into the bank.

How much are you divesting in SBI General Insurance?
IAG (Insurance Australia Group) had the right for a full dial-up (up to 49%). They have already exercised it. They have already given us the letter, and the valuations are underway. From SBI General, we may not bring back the entire amount (to SBI) because the company has not yet turned profitable. We will have to see their own requirements before we take a call.

You have over Rs 61,000 crore of bad assets and restructured loans of Rs 66,704 crore, and still counting. What steps is the bank taking so that such a pile-up of bad debt does not happen in future?
At every instance a collateral is not feasible. Wherever collateral is feasible, we are definitely taking it. We are very conscious about getting collateral on every large exposure as any other bank in the market would be. Pledge of their shares, personal guarantees, any fixed assets like land and buildings. In the agri portfolio, the stress is quite high.

SBI's stress is not exactly from the agri profolio, it is from the mid corporate accounts...
The percentage of stress is high in agri portfolio. If we had written off corporate, then half of the accounts that you see today even some of the better ones may not be in existence. We have seen big names being turned around. And later on gone to do well. Wockhardt had big problems when they got into derivatives. Traditionally, the SME borrowers have been low on equity and as result when they scale up they depend more on debt. And when the economy goes into a stress situation their working capital cycles get extended because their bills don't get paid on time. This causes a strain and they are not able to produce as much as they could or should, and this begins to show as a stress in the balance-sheet. They do not have deep pockets. Companies in mining, construction, steel and textile sectors are hit.

You are steering the bank at a challenging time?
We definitely see little things getting straightened, out which would in the ultimate analysis help in investment pick-up. However, we feel that the trigger will need have to come from the government. When you are into an account and the stress starts showing it is difficult to exit it unless you take a large hair cut and write it off. If you have to recoup your money many a times you need to hand hold companies. And wait for them to cross the hump. Unless that confidence building measure happens it is difficult to imagine a lot of capital coming in without the government giving that initial push. Within the bank we have used this time to consolidate, to review our process, our products, to clean up our balance sheet so we are better prepared to get into the growth cycle as and when it unfolds. We have worked very very hard and set up stable risk mitigation systems in place.

Is there any sector you are bullish about?
There is no question of being bullish about any sector. Bullishness should not be there at all. We will take projects as they come and asses them for their viability. We will also ensure that the promoters are in a position to bring in their equity. Only then go ahead.

Your equity exposure had gone up by nearly 170%? How has this happened?
A few years back the equity exposure was brought down drastically because there was no comfort in dealing in equity. However if we believe in the Indian story we believe we need to be part of the equity market so the universe of stocks where our people could take positions has also gone up. We have put in more money. Our exposure to the equity linked mutual funds which have given excellent results have also gone up. Equity exposure has gone up due to the confidence we have on the Indian markets. Overall our base is very small.

At the Joint Lending Forums (JLFs), different banks were to come together to take a call on stressed assets. But bankers say there are co-ordination problems...
There are issues like banks not wanting to take additional exposures. There are issues about banks not wanting to share collaterals. All of those issues are very much there. At the end of the day there are several banks and several boards with independence. This is definitely an issue which the regulator is also looking at.

Smaller banks complain that bigger banks like SBI are bulldozing other lenders in the JLF?
That is not true. Nobody can bulldoze anyone else. But yes, if some bank has a Rs 20 crore exposure and we have Rs 200 crore then we will definitely try and protect that exposure. That is very much there. But that does not mean we are bulldozing anyone. Fact is that when things are good they all come in and then there is no bulldozing, and when things work differently they call it bulldozing. It does not work both ways. I don't think that is fair at all.

You had some special incentive schemes for retaining women employees. Have you implemented them?
They can get two years of leave for child care or for elderly care. We have extended to single men as well. Because those single men who have such dependence and don't have a spouse to look after they equally need these support mechanisms. Seniority is lost. If we take care of that then those people who have been working all along feel discriminated. But two years is not too much time to make up. So it is not impossible to make it up specially if you take it towards the beginning of your career. If you are really good you can make it up but all the same I agree it is a detriment. But I think it is the best of a difficult situation. Rather than dropping out of the workforce, you are able to come back.

What about the transfer policy?
Bank has been very sensitive for a very long time. Take my case for instance, because my husband was in IIT Kharagpur I was in and around three branches in Midnapore district for nine years. So the bank has taken care. However, it is challenge. There are hardly any recruits from Gujarat, Madhya Pradesh, North East and Karnataka, people from other states get posted there and many people get married and they want to move and so on. After joining many of them get married and want to move, it is becoming a very big challenge. This is a reality of the situation.

In 2006, you were posted in Lucknow. And you wanted to leave?
I look back and think I was a bit foolish. Because sometimes we imagine difficulties where there are none. Which is why I keep telling people that you take the plunge and the way will make itself. You don't need necessarily see the road right to the end. The road is there, you are not able to see it. So take the plunge and let the road to form in front of you.