SBI to rework structure in circles

State Bank of India (SBI) is revamping the structure within business circles to improve oversight and recoveries. The country’s largest lender will reduce an average number of branches being looked after by one regional manager to 40 from 60, as part of the restructuring.

The 14 circles spanning states and Union territories are part of the national banking group. They are key to retail, micro and small enterprises, farming business and financial inclusion activity.

The bank has decided to limit the number of branches under each regional general manager. “We have split regions that are large to improve oversight,” said Pratip Chaudhuri, chairman of the bank.

Its branch network has expanded from 11,448 at the end of March 2009 to 14,097 at the end of March 2012. Staff strength has grown to 2,15,481 at the end of March 2012 from 2,05,896 three years ago.

In 2011, it had restored the post of deputy general manager at circles. The post was removed after recommendations of a consultancy firm during the tenure of O P Bhatt as chairman. This led to a huge army of regional managers reporting to general managers, who are in-charge of network. Typically each state circle has two to three networks, depending on business volumes, for managing operations.

Chaudhuri said the restoration of deputy general manager has helped the bank increase recoveries from non-performing assets. The change was visible in the performance of fourth quarter ended March 2012: Total cash recoveries stood at Rs 1,603 crore. The share of SMEs was Rs 378 crore, Retail was Rs 485 crore and that of agriculture was Rs 219 crore.

Besides effecting changes at circles, the bank will also strengthen the mid-corporate group (MCG), which saw much stress. Many corporate balance sheets became weak due to the economic slowdown, the crisis in Europe and the rising interest burden.

SBI chief said the loan book of this group grew by 6.4 per cent to Rs 1,67,639 crore in FY12 from Rs 1,57,566 a year ago. This business group has seen stress with muted growth in FY12.

Besides deputy managing director, MCG will have two chief general managers to ease decision making and monitoring. This group saw the higher amount of slippages and the lowest growth, reflecting stress on balance sheet.