[sbinews] SBI to spin off Rs 5000 cr stressed assets

  • From: "Rajendra S. Pai" <rs.pai@xxxxxxxxx>
  • To: <sbinews@xxxxxxxxxxxxx>
  • Date: Wed, 22 Sep 2004 14:08:26 +0530

SBI to spin off Rs 5000 cr stressed assets
 (Business Standard)
Poornima Mohandas / Mumbai September 22, 2004

Move follows recommendations by McKinsey.

State Bank of India (SBI) will hive off Rs 5,000 crore of stressed assets
into a separate division.

This follows recommendations by consultants McKinsey & Co, appointed to
draft a business process re-engineering exercise for the bank.

The executive committee of the SBI recently approved the setting up of the
new division.

The stressed assets division, to be headed by chief general manager T M N
Singh, will look after all the impaired loans of the bank. Additionally, it
will also have charge over the written-off accounts for recovery
possibilities. Singh was earlier in charge of both credit and non-performing
assets (NPAs) at SBI.

The net NPAs of SBI as on March 31, 2004, was at Rs 5,440 crore (3.48 per
cent) and gross NPAs was at over Rs 12,000 crore. SBI is aiming for a net
NPA to net advances ratio of 2 per cent by March 2005 which would work out
to Rs 2,500 crore.

As part of the move, nine rehabilitation and recovery branches of SBI will
now come directly under the stressed assets division. This will give
focussed attention on this activity, said bank officials. Earlier, the nine
branches functioned under local head offices.

The bank has recently completed its the restructuring exercise carved out a
whole new structure with seven main divisions or profit centres.

These divisions - retail, agriculture, SMEs, government business, corporate
accounts group (for large corporate accounts of over Rs 100 crore), project
finance and mid-corporates group (for clients with a turnover of over Rs 25
crore)- have been carved out of the corporate accounts group and the
national banking group which were set up in the mid 1990s.

The stressed assets group will be part of the mid-corporate group. Each of
these groups are being headed by a chief general manager or a general
manager. Out of the eight divisions, there will be some new groups as the
agriculture division, SME, government business, mid corporates and stressed

Meanwhile, the national rollout of the mid corporates group has been kicked
off with the Mumbai pilot tested and reviewed.

The cogs of the group extend across seven regional offices and will be fully
rolled out by October 2004.

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