From : E-Group, STC, Salt Lake, Kolkata Dear Member, Kindly double click on the enclosed attachment to read it. With regards, Anup Sen, Moderator E-Group, STC, Salt Lake, Kolkata email : stcsaltlake@xxxxxxxx We are receiving emails from our members advising that they are not receiving emails from us. In this regard we like to inform our members that there may be two reasons for non receipt of the emails as under: 1. If mails are returned from your mail box (due to hard bounce) as there is no space in the mail box, our system automatically delete your email from the list. To avoid these, please ensure to download regularly the mails sent by us and keep enough space in the mail-box. 2. Some of the e-mail servers (e.g. yahoo.com, sify.com, rediff.com or hotmail.com etc) may treat our mails as "SPAM" and delete the mails. Some of them put these mails in the "Bulk Folder". If such is the case, please take up the matter with your respective e-mail service provider to sort out the problem. However, if you do not receive our mails please contact us. We shall be glad to receive your feedbacks through emails regarding the mails being sent to you through this e-group. This message is intended only for the use of the Addressee and may contain information that is PRIVILEGED and CONFIDENTIAL. If you are not the intended recipient, dissemination of this communication is prohibited. If you have received this communication in error, please erase all copies of the message and its attachments and kindly arrange to notify stcsaltlake@xxxxxxxx immediately.Title: State Bank of India, Staff Training Centre, Salt Lake, Kolkata. : : stcsaltlake@xxxxxxxx : :
Despite having a 19 per cent growth in
net profit during the fiscal gone by, there has been decline in the rate of
growth, which was 20 per cent in 2002-03. Don?t you think that this is a black
mark? Not really. This 19 per cent growth in
net profit was achieved despite a lot of challenges. Take for example, SBI Home
Finance Ltd and the massive provisioning that SBI had to make for it during
2003-04. Again, the 90-day norm on non-performing assets (NPAs) has forced us
to make a much higher provisioning on this account. Our staff expenses has also increased by
over 13 per cent following additional contribution to the pension fund and
provision for leave-encashment liability for the current year. I admit that all
these difficulties are parts of running a giant organisation called SBI. But
facing all these challenges, achieving a 19 per cent growth is no joke. But why did you then declare a higher
dividend of 110 per cent against 85 per cent earlier? One presumes that you had
to take special permission from Reserve Bank of India to declare this dividend
since still now your net NPA is above three per cent. This was purely a goodwill gesture
towards our shareholders. As I said, the SBI Group?s net profit has crossed the
$1 billion mark and the management decided to share the pie of success with the
bank?s shareholders. So we declared a 100 per cent regular dividend and 10 per
cent special dividend for our shareholders. I believe that in the long term,
this decision will help the bank is retaining investors? confidence. My vision
is to convert SBI into truly a global institution in the near future in terms
of customer service, investors? confidence and profitability. What do you think will be your greatest
challenge in achieving that? Credit delivery and credit quality are
two foremost challenges, that we will need to address. I have no hesitation to
admit that SBI needs to drastically increase the pace of credit sanction and
credit disbursement. Of course, we have taken some steps in decentralising our
operations, with greater functional autonomy to the circle credit committees. We have also undertaken a business
process-reengineering programme and engaged McKinsey & Co as advisor of the
project. McKinsey has started giving its reports in parts and SBI has started
implementing its advises in departments like national banking group, corporate
banking, medium & small enterprises advance section and other mortgage loan
sectors. The aim is to minimise the time-gap between application, sanction and
disbursement. Similarly, getting good quality loan proposals will be another
challenge for us. And this is applicable not only for SBI, but also the seven
associate banks. How far is the NPA fear psychosis
responsible in this unnecessary delay in credit sanction and credit
disbursement? You are absolutely right. This fear
psychosis has been a major reason for this delay. The Indian Banks? Association
(IBA) in its recent report, has said that banking services should be absolutely
brought out of the ambit of Central Vigilance Commission. IBA is absolutely
right in its demand that banks should have their own checks and balances. Many a times, a sincere and honest
officer has been hauled by CVC because a loan sanctioned by him has become a
NPA. Now such instances often make others feel shaky and they become
over-cautious while processing a loan application. Already, bank officers upto
a certain scale, have been brought out of the CVC ambit. But that is not enough
and the entire industry should be brought out of that. Is there any possibility of merging the
seven associates of SBI with the parent bank? Such a merger is not at all necessary
and the seven associate banks will continue to operate as independent entities.
But we have synergised much of their operations. First of all, both SBI and its
seven associates are on the same technology platform. The business process
reengineering programme is applicable for all of them. Both SBI and the
associates are cross-selling products of SBI Life Insurance Company Ltd and SBI
Funds Management Pvt Ltd. With so much of synergy, a merger of associates with
SBI is not necessary. What kind of credit offtake do you
expect during 2004-05, especially in terms of industrial credit? Industrial credit, especially project
financing is going through a very good phase these days. During 2003-04, the
average growth in project financing has been to the tune of around 16 per cent
and the growth is expected to be somewhat during 2004-05 during the current
fiscal. Sectors like infrastructure and steel
industry are projected for going through a healthy growth track during the
current fiscal and hence, lending to these sectors is expected to receive a
major boost. Infrastructure lending has grown at the
rate of 53 per cent during 2003-04 and a similar healthy growth is expected
during 2004-05 as well. The services and SSI sectors are also expected to make
major contributions in improving the credit offtake. How is SBI expected to gain out it? We have projected a 15 per cent growth
in overall advances during 2004-05. With the growth in industrial credit, our
bank is expected to be on par with the industry. Agricultural credit is
expected to grow at the rate of seven per cent and retail credit, at the rate
of 36 per cent. In retail credit, housing finance, automobile finance and
mortgage loans will be the main contributors. As of the investment part, SBI will
continue with its focus on treasury operations, especially trading in
Government of India securities. I also expect our foreign exchange operations
to contribute substantially in achieving a healthy profitability figure by the
end of the current fiscal. What is your target for NPA for 2004-05? My target is to bring down the net-NPA
figure, as percentage of total advances to below two per cent by the end of
2004-05. Similarly, we are inducting technology in a bigger way to bring down
the transaction cost. Currently, SBI?s transaction cost is 1.8
per cent and my target is to bring it down to below one per cent within a
couple of years. What are your plans regarding SBI Mutual
Fund? It seems that you are not very aggressive with this subsidiary. Look, SBI Mutual Fund in itself, is a
strong mutual fund. But you are right that we are not very aggressive about it.
In fact, we are scouting for partners to run SBI Mutual Fund as a joint venture
entity. We are holding talks with a couple of parties and we expect to finalise
with one of them very soon. Do you feel that the falling interest
rate regime is coming to an end and do you expect the rate to take an upward
movement now? The overall economic situation projects
that the interest rate will remain stable for the medium term. The inflation
rate is also within the manageable limit and the overall situation does not
justify further cut in the interest rate. As of whether there will be any rise
in the interest rate or not, I personally feel that a rise cannot be ruled out,
but it will not happen immediately. Despite Prime Minister Dr Manmohan
Singh?s assurance that state-run banks can go ahead with public offering plans
provided the government stake in these banks remain over 51 per cent, there is
a constant pressure on banks and the government by the Unions and the Left
Parties for halting further dilution of government stake. Do you feel that such
kind of pressure will force many banks to shelve their fresh public offering
plans? I really do not think so. Of course such
pressures are not desirable but I feel that individual banks will continue with
their fresh public offering plans, according to their own requirements and such
pressures will not impact their decisions. If the public sector nature of the banks
remain intact, which will be if the government stake remains over 51 per cent,
what is the problem in dilution within the permissible limit? ?Credit
delivery and credit quality are two foremost challenges, that we will need to
address. I have no hesitation
to admit that SBI needs to drastically increase the pace of credit sanction and
credit disbursement.
Of course, we have taken some steps in decentralising our operations, with
greater functional autonomy to the circle credit committees? -AK
Purwar, Chairman, SBI |
