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New McKinsey report for business
process reengineering
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The State Bank of India is
streamlining its loan sanction process to pare the time for sanctioning loans
to 30 days.
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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.
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?We will bring down the loan
sanctioning time further to two weeks,? said Chandan Bhattacharya, managing
director of the bank.
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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.
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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.
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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.
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?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.
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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.
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In due course, the bank likely to have
a deputy managing director or even a managing director overseeing the new
division.
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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.
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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 June.
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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.
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?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.
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In another development, the bank has
established in-house teams to work with big companies on developing
customised financial products.
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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.
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?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 Bhattacharya.
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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.
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The behemoth's new
face
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Mid-corporate wing
to cater to Rs 10 crore - Rs 99 crore loan proposals
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Centralised loan
processing cell to vet all proposals
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Standardised credit
sanctioning format eliminates the exercise of discretionary powers
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All loan proposals
to be cleared in 30 days
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The Sate Bank of
India to go the whole hog in lending to 39 industries, to slow down lending
to 3 industries
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In-house teams
working with 30 companies to develop products
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