After big-ticket recoveries, SBI turns to MSME and retail borrowers

India’s biggest lender State Bank of India is shifting focus to recoveries and resolution in the small business and retail segment as most big-ticket stressed accounts have been dealt with enhanced recoveries.

It will boost the use of call centres for recoveries of retail and MSMEs loans and also plans to enlist business correspondents for such tasks in semi-urban and rural areas.

It is redeploying bankers in Stressed Asset Resolution Group (SARG) and has trimmed the strength of those working at this unit to about 1,600, from a peak of 2,000 a few quarters ago.

Swaminathan J, managing director-risk, compliance and SARG, SBI, said with the kind of asset portfolio the bank has, it is not a big number. “The bank does not intend to scale down it further as going forward, recoveries have to come from multiple mid-size and small accounts,” the executive said.

“Chunky ones – big-ticket stressed accounts where you need complex capabilities – are more or less resolved,” he said. Now, the bank has to work more with small mid-sized entities in the up to Rs 250 crore category. Their recoveries are also going to be Rs 5 crore-Rs 200 crore (per account). “We will not see large size recoveries (Rs 3,000 crore or higher)”, he said.

The bank is not going to lower the guard. The follow-up for recovery dues and work on resolution will become intense to ensure improvement in asset quality profile, the executive said.

He said the changes are part of realignment where SARG had three chief general managers looking after various segments. After one of them moved to head the bad bank (National Asset Reconstruction Company), his vertical looking after infrastructure and commercial was merged with the other two.

Some of the large stressed accounts, which are fully provided for, would move to the bad bank. While portfolio-wise, “it will not change much for us, in terms of management bandwidth, it will release some people. They will be redeployed,” he said.   

Referring to using business correspondents for retail portfolios, he said there is already an arrangement for collections from small-value accounts. The revamping of collection machinery is in the works and the bank will augment the people who are involved in collection work, Swaminathan said.

At the branch level, the staff is saddled with multiple responsibilities of managing day-to-day operations, making it tough for an intense follow-up.

The use of call centres is also being scaled up. Until now, these centres were handling mostly inbound traffic (calls). They were not making a lot of outbound calls. Now, the bank has put a large team to make calls to customers whose accounts have fallen due or are going to fall due. The latter are termed pre-delinquency calls.

According to SBI, at least 30-40 per cent of people pay following a call. There is no need for a hard recovery effort. Only 10-20 per cent hard-core delinquencies will need actual follow-up. The slippage ratio for Q2FY22 was 0.66 per cent, down from 2.47 per cent in Q1FY22.

SBI’s gross non-performing assets (NPAs) declined from 5.32 per cent in June 21 to 4.90 per cent in September 2021. Net NPAs were also down from 1.77 per cent in Q1FY22 to 1.52 per cent in Q2FY22.