Bank of Baroda ready for life beyond Covid, merger: MD & CEO Sanjiv Chadha

Despite the Covid-19 pandemic, Bank of Baroda (BoB) is confident of completing the amalgamation process by December 2020, ahead of the initial timeline of March 2021, says Sanjiv Chadha, managing director (MD) and chief executive officer (CEO). In an interview with Abhijit Lele, Chadha says the bank does not see many challenges in restructuring corporate debt. Edited excerpts:
 

What is the sense you get as we gradually exit lockdown and engage in easing? When would we see the bank’s business become normal?
 

It is quite clear that it will be a long drawn return to normalcy. There will be return to partial normalcy, and after that, there will a long haul. For us at BoB, work is pretty much back to normal. Except for eight cities, which have been impacted the most, all are coming to office every day. The productivity may be actually higher compared to what it may have been earlier. Some sectors have come back while some sectors will take time.
 

Coming to debt restructuring, we have three classes – corporate, MSME and retail. While banks are well versed with corporate and MSMEs, how are you going to deal with retail, which is being introduced for the first time?
 

It is too early to say how retail loans will be recast. We will know that in due course. We are talking of retail — personal loans, car loans and home loans, among others — which is 20 per cent of our book. For us, home loan constitutes about 70 per cent of the retail book. Also, BoB took a conscious view to chase the best part of the market. We have tight benchmarks in terms of scores. The number of people who approach us for recast may be relatively small.
 

What is the estimate for restructuring of MSME loans?
 

Restructuring is an extension of the current dispensation which is tested and has worked well. We had the benefit of two things —one, the cut-off date for the existing restructuring scheme (MEME) is changing. Second, rolling out of ad hoc limits for MSME customers — bank’s scheme giving 10 per cent working capital limit and government guarantees 20 per cent fund-based facility. Due to this, banks reached out to all most all customers and have fair assessment of what their requirement is.
 

On the corporate side, which sectors will see more restructuring?
 

If you look at our portfolio, obviously airlines are there. In hospitality, the exposure is less. We have large exposure to road projects and road traffic has been impacted. In large corporate loans, possibly road sector may be the one that may require assistance. On the restructuring of specific cases, we do not see as many challenges in the corporate sector as normally you may have expected.
 

With the moratorium behind us, what are the priorities in terms of operations?
 

The restructuring process will go up to June next year. It’s very important because you would want to do it right for customers and the bank. That means, engagement needs to be thorough to achieve the right balance. The bank has also been working on two challenges – the Covid-19 crisis and pursuing amalgamation (of Vijaya and Dena Bank with BoB). We had targeted to finish the merger this financial year. But despite Covid, we are confident of finishing it this calendar year itself.
 

What does that mean for operations and business?
 

Probably between now and the next 30 days, as soon as amalgamation is over, the bank will embark on the process of rehaul to ensure efficiencies are built in and new products are emphasised. We want to look at cost structures in terms of manpower and branches.