Stock Market

NPA resolution, merger, digitalization top priorities: SBI chief

State Bank of India Chairman Arundhati Bhattacharya recently got a one-year term extension.

In an interview with CNBC-TV18, she talked about her priorities during the remainder of her term, how much of the Reserve Bank’s 1.75 percent rate cut SBI had passed on to customers and the bank’s plan to sell non-core assets.

Below is the verbatim transcript of Arundhati Bhattacharya’s interview to Malvika Jain on CNBC-TV18.

Q: Can you provide us with some clarity on your plans to sell non-core assets?

A: We had committed to about Rs 3,000 crore during the years of which we have done about Rs 1,000 crore through the sale of the NSE stake. Another Rs 2,000 crore we will be able to do. The two things that are under active consideration are the insurance companies. So, either selling of stakes or dialing up by the JV partners. So, one of these will happen and that should enable us to get the rest for the year.

Q: Is there any clarity on the timeline?

A: Within the year as I said.

Q: By the end of the year?

A: By the end of the fiscal year.

Q: But do you think the market is conducive?

A: Yes, at this point of time the market is quite conducive.

Q: What about smaller businesses, they have been under a lot of stress because of high interest rates, because of not having significant and sufficient demand globally as well as within the country? Are there any particular steps that you are going to take to help them combat the challenges that they are facing?

A: Actually if they are part of a supply chain and if the large corporate is stressed then it is pretty difficult for them to not be stressed as well because at the end of the day the bills have to be paid by the people to whom they are supplying and if they are not paying the bills then you have liquidity issue. And whereas you may have a working capital cycle of 180 days. When that gets stretched to 360 days most of your margins get wiped out.

So, these are issues that have to be worked out. Again as I said it is not something that can be solved in isolation. It will have to happen as the economy revives. Lower interest rates will definitely help these corporates. So, we are looking at what can be done over there. Of the 175 bps cut that the Reserve Bank of India (RBI) has done we as a bank have passed on 95 bps. More will get passed on in the near term rather than in the longer term. We may not have done it in big dollops of 25 bps but consistently month-on-month (M-o-M) we have been cutting and that is why today we can say that about 95 bps have already passed on.

Q: Do you think there is leg room for the RBI to further cut rates?

A: Our own in house research indicates that the inflation numbers will keep coming down and if they keep coming down surely there will be space for further rate cuts. We are aware and RBI has said as much time and again that they are data driven and if that be the case the data will support further cuts.

Q: You have been given an extension of term. It is a big achievement, congratulations. Going forward what will be your top three priorities?

A: The top three priorities I have already laid out earlier and I don’t think I will change those right now. The priorities will remain – one of them of course would be the resolution of stressed assets, the second would be to do an orderly merger which we have already undertaken and third of course to take forward the digitalisation agenda. So, these are the three main things and we will continue to work on all of these areas.

Q: When you talk about merger you have set a timeline, by the end of this fiscal this merger will take place.

A: Yes.

Q: Do you think you will be able to stick to the timeline?

A: At this point of time, yes. We are on track, of course we do not know of any sudden occurrences that might happen but as of now we are on track.

Q: As far as the issue of non-performing asset (NPA) is concerned most banks have identified or all banks have identified the NPAs but resolution remains a far cry. What is the way forward at least as far as SBI is concerned what are you thinking about and what is your plan?

A: There is no one plan and there is no one solution that can be done. It will have to be an account by account solution. So, it is difficult right now to give it all in a small package. That is not how it works. But I can only assure you that we are working quite steadily towards it. We should be seeing a little more action on this front as well as maybe some results as well in the near term rather than in the longer term.

Q: What to your mind are the solutions to these problems, these challenges and concerns that investors have?

A: It is difficult to give you all the solutions in a short interview but we are working on them. Where demand is considered there are a few triggers that we are hoping will result in better demand and in India where 50-60 percent of our people are actually on the land it is very important that rural demand picks up. We are hoping on the back of good monsoon that will happen.