Mumbai: State Bank of India (SBI) will prepare a blueprint for the next three years that would include targets and benchmarks mainly related to asset quality, credit growth, digitization and human resources management, newly appointed chairman Rajnish Kumar said on Thursday.
“We will have to see what is working, what is not working, what course correction is required and then we will have a blueprint for the next 36 months with our short and long-term goals clearly delineated," Kumar, who currently heads the national banking division of SBI, said in a media conference call. The plan will be prepared in a month’s time, Kumar said.
Kumar will take charge on Saturday as chairman of the country’s largest lender, for three years. He will succeed Arundhati Bhattacharya, who will retire on Friday.
Currently, like most of its peers, SBI’s profitability is under strain because of bad loans and sluggish credit growth, and resolving both these issues are Kumar’s top priorities. At the end of June, the bank was weighed down by gross non-performing loans of Rs1.88 trillion or almost one-tenth of its total advances. SBI is also the lead bank in a majority of the 40 cases referred for bankruptcy proceedings at the National Company Law Tribunal (NCLT).
“As far as the stress in the large corporate (segment) is concerned, each case is different (in) complexity. I will definitely be doing a review on a case-to-case basis with our teams," he said.
On revival of credit growth, Kumar said that retail loans, including those for small and medium enterprise, agriculture, will be the key drivers for growth, because demand for corporate loans remains muted.
Still, “we will be actively looking for good corporate credit and SBI has that capability to increase that portfolio. But I will need some demand revival," he said.
SBI is not revising its fiscal 2018 loan growth target of 6-8% guided in August as of now. At the end of June, its credit growth was 1.46%. Currently, non-food bank credit growth for the banking industry is around 6%.
According to Karthik Srinivasan, group head of financial sector ratings at Icra Ltd, SBI is not pressed on capital and hence they can look at reviving credit growth.
“Additionally, not only for SBI, but for the entire system, focus on loan recoveries remains the key because bad assets are pulling down overall accruals for banks. Faster recoveries would be positive for individual banks as well as for whole system," he said.
Additionally, the bank will also continue its focus on digitisation as well as on various initiatives on human resources (HR).
“Undergoing digital transformation and readying the bank for the future, I have been leading this initiative in my previous capacity as well. That will be continued," he said.
SBI wants to implement a big data lake—a one-point data processing and storing warehouse, where vast pools of data, including that generated on its social media platforms, will be analysed to enhance customer offerings.
One of the key reason for the seamless merger with SBI’s associate banks was the use of data analytics as the bank got various insights for better branch optimization, human and technology integration.
SBI is also in the process of revamping its human resources management with various initiatives related to attracting and nurturing talent, skill development, performance improvement and succession planning, among others.
Kumar added that for the first time in history of SBI, clerical staff has been given targets and their performance is being monitored.