SBI declares war on NPAs as bad loans spurt

Faced with rising bad loan problems, the country's largest lender State Bank on Friday announced a new roadmap which will limit slippages and also give early warning on stressed assets.

The bank also announced slew of initiatives in the areas of cost control, productivity improvement, better incentives and overhauling of HR policies.

"We have decided to move stressed assets recovery branches that were reporting to the national banking group (NBG) so as to have better focus and outcomes," SBI chairperson Arundhati Bhattacharya said while announcing third quarter numbers.

"With that in mind, we have now changed the structure and created four general managers in all the four zones--North, South, East and West--who will be reporting to the stress management group and will actually be owning these stress asset recovery branches in the circles," she added.

The bank's gross non-performing assets (NPA) ratio deteriorated to 5.73 per cent in the reporting quarter as against 5.30 per cent a year ago.

The bank also made it easier for corporate account group (CAG) and mid-corporate group (MCG) to migrate all of their accounts, which need hard recovery measures, into CAG.

"With this we hope, the CAG will be much more focused and will be able to bring about faster resolution," she said.

The bank also formed various committees which will monitor loans that are showing early signs of weakness. "The other thing which we have done is we have created various committees which will look into not only the stressed assets but those accounts which are beginning to display weakness," she said.

The largest of the committees which look at loans above Rs 500 crore will be headed by Bhattacharya herself, while the committee which will track loans in the Rs 100-500 crore range will be headed by Pradeep Kumar, managing director (corporate banking).

Those in Rs 50-100 crore range will be headed by Soundara Kumar, deputy managing director (stress asset management group), Bhattacharya said.

The committees which will monitor loans between Rs 25 and 50 crore will be headed by CGMs of the circle and CGMs of the verticals. Loans of Rs 5-25 crore ticket size will be looked by general managers at circles while those in the Rs 1-5 crore will be tracked by deputy general managers, she said.

These committees will help the bank to do a weekly review of the accounts, conduct analysis, take immediate steps and follow up action so as to ensure that weak accounts get immediate attention and their chances of becoming NPAs are minimised.

"In these reviews, we also try to come up with whatever solution necessary such as restructuring, sale of assets and other innovative measures. With this, we hope we will be in a better position to control the kind of slippages that we have been seeing," the chairperson said.

The bank is also putting in place a technology-backed earning warning system which will capture data to predict weakness in accounts.

"It will be able to be something like a predictive software that will tell us where we are beginning to see weakness in the economy, whether geographically, whether industry wise, whether ticket size wise. This will help us take a decision as to where we need to put more attention or even to decide where we will take more exposure," Bhattacharya said.

The bank aims to finalise a vendor for this early warning system by March end and then implement it within next four to six months, she added.

The bank is also looking out very closely on controlling its cost. She said costs may not be to some extent amenable to control where employee wages are concerned but in many other areas like travel, centralisation of purchases, energy consumption, the bank is looking at to control costs. This initiative will be led by CGO RK Saraf, she added.

"Going forward when we budget for the next year, we definitely like to see better control on the costs," Bhattacharya said.

The bank is also engaging in aspects of other income like government business, cash management product, point of sale and ensuring better realisation of written off accounts.

"Other income is showing some uptick and we hope we will be able to keep this trend up and ramp it up further," she said.

On the HR front, Bhattacharya said the HR policies are outdated and needs an overhaul. "The way we have been appraising our people, the way we have been nurturing talent, the way we have been creating succession planning, all of them need a very close look."

The bank has also taken steps to improve productivity.

"Various means are being taken including ensuring that we have applications to make our people, who are into marketing, free of the branches so that they would be able to sell our products on hand held devices," she said.

On training of employees, she said all training programmes of the bank will incorporate the conception of risks and there will be a mandatory courses that certain roles will have to go through.

"We are trying to ensure that the organisation becomes a learning organisation and therefore changes the way it has been doing its business," she said, adding the bank is also in the process to appoint a new vendor by month end to ensure a differentiated and much better customer experience.