 "Mrutyunjay Mahapatra")
Mrutyunjay Mahapatra, newly appointed managing director and chief executive officer at government-owned Syndicate Bank, tells Namrata Acharya where the organisation stands and talks about related matters. Edited excerpts:
What is your vision for the bank over the next year?
To build capability and find areas for growth, in a capital-light manner. Sectors which are growing and where we can grow, without exposing ourselves to the risk of additional capital in a big way, would be my focus area. Also, human resource and digital capacity building, and risk management.
How do you see the mix of corporate and retail assets (loans) changing in the next one year?
Right now, the corporate (loan) book is about 43 per cent of the total. I would like that to come down by another 10 per cent.
Your strategy to contain losses?
Before I came, the earlier board of directors had decided to also recognise possible NPAs (non-performing assets) in agricultural loans. These are the result of a mix of factors. Various debt waiver schemes resulted in some delays. There are NPAs in the system, which we are providing (provisioning) for. So, hopefully, things will stabilise in the next few months. On corporate loans, we are doing very well in cash recovery. My experience is that if you are trying to resolve NPAs in the early stages, then it is easier than doing so at a later stage, when the security value also diminishes.
For corporate loans, provisions are fully made. I have created a new vertical called digital transformation and asset management, under the charge of an executive director (ED). Instead of both EDs doing similar things, one ED will focus at digital transformation, which requires acquiring people through digital channels, bringing more efficiency into our operations. This will also require some organisational tweaking and reporting of structure changes. These things will be taken on priority.
How severe is the problem of agricultural NPAs in the banking sector?
The banking leadership through the country has been saying that credit discipline and credit culture are always impacted by the announcement of a debt waiver. Typically, these are announced for farmers with loan dues of Rs 100,000 or less, essentially small and marginal farmers. But, everyone else, even large farmers who have taken loans above Rs 100,000 also expect a debt waiver.
At the same time, we see rural argo-based industries getting incentives, crop support prices have been raised, the storage network is increasing. Hence, agricultural NPAs at the smaller level are likely to remain a problem. However, for the larger loans in the segment, particularly agri infrastructure ones, there is an uptick, because there is demand for it.
What is your view on the insolvency law? What resolutions of these are you expecting by year-end?
The results have been good. Since it was a much awaited intervention, there is a bit of overcrowding. Appeals and decisions of the Supreme Court and high courts are also unfolding. We are expecting a typical haircut (dues writeoff) of 40-50 per cent in the process.
What about your plan for an ESPS (employee stock purchase scheme)?
Right now, public sector bank stocks are not doing well. For a successful ESPS, one has to give some incentives for employees to subscribe. We are waiting for the right opportunity. Meanwhile, we are reaching out to employees, saying this is probably the bank which has unlimited upside and limited downside, as of now. If the right technology platform and organisational platform can build in the next two to three months, this will be a value stock. We are expecting to raise Rs 2.5-3 billion from the issue.
What is your view on the merger of PSBs?
Merger is a much more complex process than was initially thought. It is not simply about merging two systems but has to be planned very well. In the current format, we are talking about completely different cultures to be merged.
Your capital requirement for the year?
We are assessing what we will need.
It will be important to see how the provisioning scenario unfolds. Whether corporate stress has bottomed out or not, the jury is not out.
