For Arundhati Bhattacharya, the challenges still continue. The first woman chairman of State Bank of India has taken some measures that seem to be working. Bad debt, for instance, has dipped in the fiscal first quarter.
A lot of the stressed assets, however, still remain and she prepares for a long- drawn-out battle against them.
She is also chalking out plans to monetise non-core assets and diversify the leading bank's international book taking up the exposures. She is in favour of allowing SBI's associate banks to flower on their own.
An avid blogger, she keeps in touch with her 2.02 lakh employees through blogs. In a free-wheeling interview with Manju AB, she talks about how cases like Bhushan Steel are a blot on the system.
How are cases like Bhushan Steel occurring? About 51 banks sanctioned Rs 40,000 crore to the company.
The consortium of lenders for Bhushan Steel is meeting next week and we hope to dig out a solution. The account is performing and it is a standard account. Even private banks have exposure to Bhushan. We will appoint a management agency to check the company's book. Punjab National Bank is the leader of the consortium for a Rs 20,000 crore term loan and SBI is the leader of the consortium for both fund and non-fund based exposures worth Rs 20,000 crore. In respect of all credits, there is a call you need to take and it does not fall into any particular pattern. Each company is different. So very often, the call is not driven from textbooks. People become afraid of taking calls because in hindsight, different kind of conclusions can be made. We accept all proposals, but do very rigorous due diligence. We are never dependent on brokers for our loans. The Bhushan episode is more like an individual act. SBI has a Rs 6,000-crore exposure to Bhushan Steel, a part of which is non-fund exposure.
Even on NPAs, there is lot of stress with fresh slippages of Rs 9,925 crore and outstanding gross NPAs at Rs 60,434 crore.
The loan waiver announced in Andhra Pradesh has turned a lot of credit non-performing, not just in Andhra Pradesh but also in other election-bound states. For us, over Rs 1,900 crore of fresh slippages in the first quarter are from the agriculture sector. We are working with the government to see if we can instill a financial discipline for repayments. The stress in the mid corporate and the SME segment continues. The gross bad loans for the quarter are down both sequentially by over Rs 1,171 crore and over the previous year, by Rs 457 crore. We will also sell loans to the asset reconstruction companies (ARCs) whose expertise is in the area of recovery while the bank will be able to concentrate on the quality credit. Even in the first quarter, we have sold standard asset of over Rs 400 crore to the ARC.
What is your outlook on interest rates?
There are expectations short-term rates will come down. This is why people have shifted to retail term deposits. Our retail term deposits have grown by 29.71% to Rs 6,40,736 crore. We had lowered our rates for deposits of up to one year by 25 basis points. Bulk deposits are just 8.36% of total deposit. Interest rates will remain stable for now with the RBI also indicating the same.
Retail continues to lead the credit growth of the bank. Is it more safe?
We are bullish and feel secure to grow the retail book. The outstanding home loan book is Rs 1,44,210 crore with a market share of 25.64% while auto loans are at Rs 28,202 crore with a market share of 20.47%. Retail will be our focus area. Due to a scanty project pipeline, the loan processing charges are Rs 355 crore, down 13% from a year earlier. Our wholly-owned subsidiary SBI Capital Markets has also reported lower profit at Rs 55 due poor project pipeline.
What is your outlook on interest rates?
There is an expectation that the short term rates will come down – which is why people have shifted to retail term deposits. Our retail term deposits have grown by 29.71% to Rs 6,40,736 crore. We had lowered our rates in the deposit of up to one year by 25 basis points. The bulk deposits are just 8.36% of total deposit. Interest rates will remain stable for now with the RBI also indicating the same.
How do you rate your first ten months in office?
I cannot say that I have overcome any one challenge. But the resolve is on to tackle the NPA problem, bring down operational expenses, and change the look and the feel of the bank. For the next phase of growth, SBI has to be technology-savvy. I was very keen that we start a digital platform. We have to have many more products on the digital space. We have come into social media quite actively and we need to do some work here. When I took over, the cost to income was soaring. It is coming down but the challenge is to keep it there.
You are also an active blogger and the employees are closely watching what you write?
Yes, it helps me reach out to each and every employee and any employee can reach out to me. If there are queries or suggestions, I see to it that it gets acted upon. Of course, not every query can be responded. But there is a connect with each and every employee through the blog and at SBI, it is a happening place.
Two boys scored very well clearing the IIT entrance but had no money to study there. One of our branch managers came to know about it and he opened an account for them and raised a collection from amongst his staff collecting a few thousand. This story got out in the press and their account number was publicised and the account attracted a few lakhs on last count. I then wrote a blog saying that this is exactly what we must all strive to do from our respective positions. See how we can transform the communities that surround us. At the end, it is the difference we have made that counts.
On the merger of the five associate banks, when is the next big announcement expected?
We may not look at mergers at all. It's possible we may let some of these banks be where they are and grow in size. In some cases, we may merge but it's time- and capital-consuming. It will take a while before we take a call. But there is a possibility that some of the associate banks may not be merged.
Is monetising your non-core assets on the radar?
We may monetise our non-core assets. We have investments in SUUTI, CCIL and NSE, which we could offload. It's not something we will do immediately. But going down the line, it's something we will look at as we go along. We are not doing any valuation. I am just telling my borrowers to dispose off their non-core assets. These are non-core assets and we can definitely look at it. Right now, we are well-capitalised, with an excess of over Rs 84,000 crore.
Despite the excess capital, credit growth was negative during the first quarter. Are you getting unduly cautious after episodes like Bhushan Steel?
We are cautious. In the first quarter, we had a problem. The audited balance- sheet of companies were not available and that made it difficult to process big value loans. We are not comfortable giving huge increases on the basis of unaudited numbers. The other reason is that, the year-end suddenly saw a spurt with oil companies taking a credit of Rs 10,000 crore. Risky portfolios, like commercial real estate, fell by 3.23%. So, our credit decisions are laced with a lot of caution.
What about the Kingfisher case?
It is in the court. Banks are fighting close to 21 legal cases in courts across the country. Now let the courts decide.