New chairman lays out SBI's priority list

State Bank of India (SBI) would try to increase its market share in deposits and loans, without taking a hit on its margins and profitability, said Pratip Chaudhuri, the bank’s new chairman.

“There would not be a significant shift in gear. But we would like to reassess business areas in which the bank experienced stress (non-performing assets). The bank has a strong presence in corporate banking and has significant presence in retail. We would increase the retail loan book to improve our leadership,” Chaudhuri, who took charge of SBI yesterday, said.

The pace of SBI’s growth — loans and deposits — had slowed in 2010-11, compared to its peers. However, in 2011-12, SBI would aim to record a growth that would be higher than the industry average. “If the industry grows at 20-21 per cent, we would like to grow by 24 per cent,” Chaudhuri said.

He said low-cost deposits were high. However, retail deposit mobilisation had lost steam and the bank would try to correct that by strengthening the branches, especially the new ones, by having more trained persons in those branches.

SBI would also take various steps to increase interest income and would focus on term loans — for both corporate and retail. The bank would also try to focus on long-term credit and reduce its dependence on short-term loans. “In our anxiety to grow, we were more active on working capital loans. Now, we would focus harder on term loans,” Chaudhuri said.

On increasing international business, Chaudhuri said SBI would like to follow Infosys’ mantra of focusing on acquisitions that bring value. The bank would open more branches and look at acquisitions in countries with high India-related trade and capital flows.

On the challenges ahead, Chaudhuri said non-performing assets had recently grown. “There is a need to control it,” he said.

Chaudhuri said the bank would hold talks with the Reserve Bank of India on teaser loans. “The bank would not want to breach regulatory prescriptions. It had provided a provision of 0.4 per cent, which was bearable. But two per cent prescription for provisioning is tough,” he said.

RIGHTS ISSUE
“Last year, there were pressing needs from other banks for recapitalisation. Our rights issue would be of a significant amount. The government is convinced of SBI’s capital needs. It remains our top priority,” Chaudhuri said. SBI had earlier said it would need around Rs 20,000 crore to fund growth for the next five years. The bank had sought the finance ministry’s approval for a rights issue of shares to raise the amount.

‘FAVOUR NEW PLAYERS’
Chaudhuri said he was in favour of opening the banking sector to new players. “The Indian banking system is fragmented. We have lived and grown with competition. We are not in favour of entry barriers and welcome more participants,” Chaudhuri said.