I cannot find a big faultline in these SBI numbers. It is a great set of numbers.
Thank you very much.
Before I get into specifics of SBI, what is your read of the economy because the numbers that you have reported are also a reflection of the kind of economic comeback we have seen?
Yes. During the pandemic period, our retail engine continued to grow well and we are in a position to hold the quality also when it comes to our retail growth. In the home loan segment itself, we have witnessed a growth of about 10% and we have already become the largest lender and we have crossed the milestone of Rs 5 lakh crore in the
home loan book. That is a major growth engine for us.
The retail segment itself has witnessed quite a lot of growth even in unsecured retail. It is unsecured because it is a personal loan but we are offering this loan only to those who have corporate salary accounts with us. So, there we are growing very well. Actually that book has become almost Rs 1,75.000 crore for us. Similarly, from this financial year, we started offering gold loans also and I am happy to share that in no time we have built up a gold loan book of Rs 18,000 crore. We have got an ambition of taking it to Rs 30,000 crore by the end of this year. Hopefully, we are somewhere near there. So, as far as retail is concerned we are doing pretty well.
The SME book has also seen growth of around 7% and that is the kind of growth which we have witnessed even in the corporate sector also. Medium sized corporates have started availing their limits which are already sanctioned and even among large corporates, we are seeing some traction.
All said and done, the impetus given to infrastructure in this Budget is going to lead to all around improvement going forward and we will have a scenario where the infrastructure will create a whole lot of opportunities for the core sector and also a lot of employment and a lot of opportunities for the personal segment to grow. Overall, going forward I expect very good times to come.
State Bank of India has also managed to contain slippages very well in a very tough Covid environment. Are you on course now to beat your own guidance of restructuring plus slippages at Rs 60,000 crore?
Yes, hopefully we should be in a position to close this financial year below Rs 60,000 crore. That is our internal goal but having said that, I would also like to mention that as and when we receive any such request for restructuring, we are taking a very pragmatic approach and extending whatever help and support that is needed.
State Bank of India has managed to show growth which is far ahead of the industry average. What is the cause?
One of course is our reach and second is a very focused attempt. During the Covid period, we were very clear about the areas where we needed to grow and where we could have growth without compromising the quality and we have ensured that. We have tweaked wherever was required to improve our delivery on the ground and ensured that there was a sharp eye to ensure that the asset quality does not drift. These things really helped us out.
For SBI, the gap between the gross and the pro forma restructuring book is not large. But for other banks, the gap is very large. Why is it so?
For quite some time, we had a philosophy of providing wherever we could sense any stress and that could be the reason we edstart reckoning stress early and started providing for it in time. Maybe that is why we do not get to see much of a difference between our gross and pro forma.
Will FY22 be a year when growth will be back and bad loans will start becoming good loans? Is SBI at a big turn for the next financial year?
Ideally speaking, we would like to be in that stage and we are making all possible efforts to get into that stage. In fact, through our stressed assets resolution vertical, we are exploring all possible options to see that we should have the resolution of the stressed assets. It could be one-time settlement, compromises,opportunities for M&A, IBC, ARC — we are open to all kinds of options and whatever creates the maximum value for us, we are resorting to that particular option to take care of the bank’s interest.
Where do you think the next value unlocking will happen for State Bank of India? Which subsidiary could be the one in the next 12 to 18 months?
Taking any such entity to the public is always a journey. We have embarked on that journey and we are taking them one by one, depending on the kind of numbers that we have in mind. When a particular subsidiary reaches that number, that is the point of time we like to take them to the market. We have two subsidiaries — one a general insurance company and the second is our mutual fund. Once we have a sense in terms of the valuation and the market positioning, we will probably go for unlocking value from these companies.
The SBI Mutual Fund will always be close to your heart. I am assuming that you will always have a priority there?
Only time will tell. More than my personal priority, it is the valuation of the company and valuation for the parent which will be the guiding principle. For that, I will be very mindful of the market conditions and at the right and appropriate time and when the company is right for going to market, we will certainly take them to the market.
One big challenge for you perhaps could be dealing with the cost to income ratios. That has been a historical challenge. How will you be able to bring SBI at par with industry averages?
Well, you have actually put a question which keeps on engaging on my mind day in and day out. We have got some cost rigidities in the system. We are controlling the cost whichever way we can and our overheads are almost flat. So the only way forward is to augment revenue streams and that is something which I am now focussing on.
Going forward, we will be in a position to build up a revenue stream and ring in a sharper appreciation of the cost to income ratio across the bank. I am sure that will go a long way in terms of arresting this particular trend of cost to income ratio being more than 50%. I would ideally like to bring it down below 50% and that is the lever which I am now focusing on more than the cost. Whatever cost we can control, we will continue to control but on the revenue side, we will try to augment the revenue streams.
While SBI has incubated a lot of great subsidiaries from AMC business to insurance to the credit card business, the recent success has been Yono. Is there any other business you would like to incubate?
Well, of course, Yono is one part of it. We are trying to leverage analytics in a big way. We have already taken some early steps and the net result of those steps is that in the quarter ending September, we did a pre-approved personal loan of Rs 5,100 crore. In this quarter ending December, we have done pre-approved personal loan of Rs 5,300 crore.
There is a decision engine sitting inside. There is hardly any cost of operation when it comes to such loans. You would have observed that in two quarters we have already done underwriting of about Rs 10,000 crore odd loans through this particular channel. Going forward, we will be building up on this analytic capability and may come out with PABL also which we have already introduced.
Hopefully, from the next quarter, we will start reporting those numbers as well. That means this is the new avenue which we are exploring. I am sure it will create significant value for the bank as well as the group. We started this pilot initially when we had done some kind of algorithms on our database and had identified customers who can be offered credit cards and that became quite successful.
Now we have started in all these things also. Eventually, we would also like to distribute all the commoditised products through e-channels and I am sure it will help in cutting down costs and incubate a new capability of the bank which is analytics. It can be a game changer going forward.
SBI is India’s biggest bank. There is a social responsibility which is more like a fiduciary responsibility and on the other side, there are expectations from investors who end up comparing it with global banks and how they are moving. How are you balancing it?
Nobody could be in a sweeter spot than this because this is something which keeps us agile and alert and helps us create value for all our stakeholders. I am sure we will make all out efforts to live up to the expectation of all our stakeholders.
