[sbinews] SBI to speed up loans, forms lending wing (Business Standard)

  • From: "Rajendra S. Pai" <rspai9@xxxxxxxxx>
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Tue, 11 May 2004 19:00:55 -0700 (PDT)

SBI to speed up loans, forms lending wing 
(Business Standard)
Tamal Bandyopadhyay / Mumbai May 10, 2004 
New McKinsey report for business process reengineering
The State Bank of India is streamlining its loan
sanction process to pare the time for sanctioning
loans to 30 days.  
For this, the state-owned bank has eliminated the
discretionary powers of its executives and has set up
a centralised loan processing cell for all credit
proposals involving over Rs 2 crore.  
?We will bring down the loan sanctioning time further
to two weeks,? said Chandan Bhattacharya, managing
director of the bank.  
Quicker loan sanctioning is but one side of a business
process re-engineering exercise that the country?s
largest bank has embarked upon. The exercise is being
implemented by consultancy firm McKinsey & Co.  
Nearly eight years after the State Bank of India
created a corporate accounts group to deal with high
value (over Rs 100 crore) corporate loans, the bank is
also setting up a mid-corporate wing to tackle loan
proposals worth Rs 10 crore and above, but below Rs
100 crore.  
In effect, the corporate accounts group has been a
bank within a bank. With the mid-corporate wing, the
bank is now virtually creating another one.  
?In 1995, McKinsey recommended setting up the
corporate accounts group. It also recommended changes
in the reporting structure. This time, it is a
business process re-engineering exercise. However, if
the changes in business processes call for an
organisational restructuring, it will be done,?
Bhattacharya pointed out.  
The bank last month created the post of chief general
manager to oversee the mid-corporate wing. V K Gupta,
the former SBI Factors chief, has been appointed the
chief general manager.  
In due course, the bank likely to have a deputy
managing director or even a managing director
overseeing the new division.  
Right now, both the corporate accounts group and the
mid-corporate wing report to Bhattacharya while the
retail and priority sector lending functions are
overseen by another managing director. Corporate
credit accounts for 50 per cent of the bank?s assets;
retail and priority sector loans form the other half. 

Unlike the corporate accounts group, which operates
from five centres (four metros and Ahmedabad), the
mid-corporate wing will be set up in at least 12
cities in the country. The pilot project will start in
An internal study has identified 39 industries to
which the bank can increase its exposure. It has also
suggested that the bank should go slow on lending to
three industries. The list of industries has been
circulated to all the branches.  
?Since we have standardised the loan sanctioning
process and centralised the appraisal process, any
proposal that comes from the 39 industries will get
almost automatically cleared if the company is in good
shape. We have started seeing the results. The bank?s
non-food credit is growing 16 per cent year on year.
The last time this kind of growth was seen was in the
mid-1990s,? said Bhattacharya.  
In another development, the bank has established
in-house teams to work with big companies on
developing customised financial products.  
These teams comprise an executive each from the
corporate accounts group and the treasury division of
the bank, from the bank?s merchant banking arm SBI
Caps and from its mutual fund outfit, SBI Mutual
Funds. Thirty such teams are now working with big
corporates. By end of the year, about 100 such teams
will be in place.  
?We are offering companies all options. For instance,
if they want money, we can give them funds at
competitive rates. If they have short-term liquidity,
they can park it with SBI Mutual Fund,? said
The bank is, in fact, following its clients across the
globe. ?Be it a greenfield project or an acquisition
abroad, we are with them. To cite a few instances, we
are funding Wockhardt?s acquisition of a German
company and Aurobindo Pharmaceutical?s foray into
China,? the managing director said. 

R.S.Pai, Web Address: http://rspai.tripod.com

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