State Bank of India Chairman Rajnish Kumar is confident that the bank will come out of the bad loan problem with a stronger balance sheet in a year’s time. There will be more upfronting of provisions so that the pains are taken first, with gains coming in later. India’s largest bank, which had deposits of ₹27,06,343 crore, advances of ₹20,48,387 crore, 22,414 branches and 59,541 ATMs as of March-end 2018, is looking to optimise its balance sheet and increase the return on assets and pre-provision operating profit by growing its interest income, treasury returns, fee income and by reducing interest expense. In an interview with BusinessLine , Kumar, who took charge of the bank in October 2017, emphatically stated that “in (FY)2019, we will have profits for sure, 100 per cent. There is no doubt”. Edited excerpts:

What are your plans

for the bank?

A lot of things have happened in the last nine months. The immediate challenge was, of course, the asset-quality challenge. All steps are being taken with a long-term perspective. One is the immediate resolution, recovery and follow-up. That is being done with an eye on the short term. But the major change in the long term in SBI is the complete revamp of the corporate credit structure. The outline was done before March this year, but we have implemented it only in the first quarter because of our accounts finalisation.

The stressed assets resolution group (SARG) has also been overhauled. Earlier, our NPAs and stressed assets were scattered all over. Now, they have been brought under SARG.

The impact of this will be that our corporate accounts group (CAG), our commercial credit group (earlier called mid-corporate group), will be free from managing stressed assets, and will focus only on current business growth.

As for other initiatives, the digital blue-print is ready, and we are implementing it in a major way….These will give good cost-efficiency. This is the major change, and this has given us more confidence. We are confident that we will come out of the difficulties. We plan to increase our provision coverage ratio further. It is good now, and the intention is to improve it further. That is the whole gameplan. The balance sheet should be stronger next year.

What steps are you taking so that the bank is back in the black?

I think we are nearly there. Don’t look at the quarterly performance alone. There can be timing differences with regard to provisioning or recovery and that can result in variation. But as far as the operating income of the bank is concerned, we are seeing an improvement in the net interest margin (NIM).

The negative impact in treasury, due to mark-to-market provisions, is taken care of. We will have profits for sure in 2019, 100 per cent. There is no doubt.

We have to increase our operating income. So, we are working very systematically on managing our NIM. Last year, when the accounts got downgraded, there was a lot of impact on NIM.

So, that impact will not be there this year. On other income, there is a lot of focus. Among the changes that we have done in our CAG is to increase the fee-based income. And we have become much more conscious about pricing.

The budgeting which the bank has done, it is all around profitability. All measures will be taken to bring down credit costs. There will be more upfronting of provisions so that the pains are taken first, and the gains can come later.

You made a presentation to other public sector bank chiefs recently on mergers and acquisitions. What is your advice to them?

Honestly, I am not giving any advice. Let me make that clear. What I have done is I shared the experience we had. Tomorrow, if any of these banks decide to merge, they can have the benefit of that experience. But each bank is different. The experience has been shared – the difficulties and the pitfalls – whether in handling staff or customers.

Beyond that I don’t have any role. Of course, if any help is needed, as a member of the banking fraternity, we will do whatever is necessary.

What new initiatives are you planning in the retail banking space?

For retail, we have to get our channel strategy right. We are doing this and more and more emphasis is being placed on digital and alternative channels. And the product refinements keep on happening, depending on the market needs.

As far as retail reach goes, we have a very wide footprint in the country. Our distribution reach is unmatched. We are well-entrenched in the digital and payments space. So, going forward, retail will be a game of technology.

Can you throw more

light on this?

If you look at our digital bank YoNo (you need only one app), it is a banking super-store on your mobile. It gives you not only access to banking services, including opening of account online, creating fixed deposits, and recurring deposits, but also allows you to buy mutual fund, insurance and credit card and even trade on your account. So, everything is on one mobile application. It is a fantastic experience for the consumer. And further enhancements are happening.

Similarly, we are using technology for lead generation. We have a 43-crore customer base. So, using data analytics, we want to drive more value out of this huge customer base. Ultimately, we want to give convenience to those customers (new generation) who are tech-savvy, give a good experience to the people who still want to go to the branches.

So, the quality there itself should be improved. And small lending – consumer loans, pre-approved personal loans, housing loans and SME loans – will be fullydigital.

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