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SBI will redefine retail loans: Purwar

BS City Editor in Mumbai

Retail business will be the driver of growth for the State Bank of India. The country's largest commercial bank is readying to launch one retail product every month.

In an exclusive interview with Business Standard, SBI Chairman A K Purwar said: "We will redefine retail loans. There will be different products for different segments like the personal segment, agriculture, small-scale industries and even small and medium entrepreneurs. Retail loans do not necessarily have to be disbursed to individuals alone."

Purwar, who will have a three-and-a-half year stint as chairman (the longest tenure in recent history), is planning to focus on two aspects: technology and quality of assets.

"The technology plan is already in place. My job is cut out and I just need to manage the transition. We are in the process of implementing core banking solutions. In the next year, we will run the pilot projects in 10 branches in the SBI group and soon after it will be rolled out in 1,000 branches," he said.

The group will have a 2,000-strong ATM network next year.

Simultaneously, SBI is launching a business process re-engineering exercise. "There has not been any substantial change in our business processes. We will empower the people at the counter. Over 14,000 branches of the SBI group across the country will sell retail loans," Purwar said.

He also made it clear that the bank's loan book would continue to grow at around 15 per cent per annum.

"We are not looking at shrinking the balance sheet. There is enough business. We will continue to grow on the back of retail loans but will not neglect the corporate sector," he said.

Purwar said the interest rates would continue to remain soft and the bank would take a relook at both its lending as well as deposit rates.

"More and more borrowers are demanding fine rates on loans. Even small-scale industries and priority sector borrowers want cheap loans. The top-rated corporates are borrowing at 7-8 per cent. The only way to protect the spread is to offer retail loans where the average yield is over 10 per cent," he pointed out.

The technology platform will be the same for SBI as well as its seven associates. "The entire group will follow the same business process re-engineering. In due course, the treasury operations will also be centralised. We will exploit the group synergies to the hilt," Purwar said.

He also made it clear that SBI would aggressively follow compromise settlements and write off bad loans. "The new securitisation law will also give us a handle to tackle sticky loans. The quality of assets is bound to improve," he said.

The technology drive will bring down the transactions cost while new products like Bancassurance will be the driver of the bank's fee business.

"Once the back office is in place, all bank branches will act as sales counters, selling insurance products, credit cards, mutual funds, government securities under one roof. We will make the bank a financial supermarket," he said.

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