State Bank of India is riding a good asset quality cycle, says Chairman Setty

We are riding a good asset quality cycle. Let’s hope that it continues for a longer time. We have strengthened our underwriting processes to ensure that asset quality remains robust. But, more importantly, what we feel is that for a bank of our size, we need to have consistency in our performance. We need to focus on the productivity of our employees as well as technology that we have invested in. Consistency, productivity and resilience are the three things which we are very seriously pursuing, and all our staff are being sensitised on these three aspects. But they have various sub-elements.

When we are talking about consistency, it is not only about consistency of financial performance, but also consistency in asset quality, customer service and compliance. These are some of the areas which we are going to focus on. It’s not that in one quarter you perform better, or one branch performs better, and the other one doesn’t perform. Across the bank, how do you ensure that the performance is consistent? Consistency is also liked by investors.

Productivity is also important because we have 2,35,000 employees, and 22,500 odd branches. In aggregate terms, we may be performing better. The numbers are good. But is there productivity improvement at the individual level? Or on the technology and digital spends front? So far, we have focused on simplification of customer journeys. But what about our internal processes? Whether the staff is equipped with simple internal processes to deliver superior customer service. Technology resilience, operational resilience and human resources resilience are the components of resilience we are focussing on strengthening.

We have categorised customers into three segments. There are people who are actively engaged with us, the “promoters”, we have to have a different outreach for them. We will go and ask them what more do you want from us. Or any improvements you need. Then there are people who are having accounts with us but not operating them. We call them “stagnators”. We would like to ask them why is that you are not operating the account(s)? Is there any quality or service issue? Or did you have any bad experience? How do we rectify that? And lastly the people who have opened the account and within a short period, they have closed and moved on. These we call “attritors”. So, we are also reaching out to them and asking them what would make you to come back to us? We are also trying to engage with youngsters to try out our products, digital products. They don’t have to come to the branch from onboarding to transacting. We have strengthened our contact centre to provide a range of services.

Market borrowings will never be a substitute for our deposits, because we have ₹52 lakh crore of deposits, and we have almost ₹39-40 lakh crore of advances and a significant investment book. That cannot be funded by the market. But, as I said, if market has got liquidity, we want to tap that liquidity. It could be a bond, certificate of deposit, etc. So, we would definitely like to utilise that route. It could be supplementary to our basic deposit mobilisation efforts. I think, it is also important to realise that probably, in a way, we are trying to deepen the bond market. With more issuances of quality paper from SBI, a lot of mutual funds, pension funds and insurance funds are looking at these instruments.

As far as infrastructure is concerned, we have a large portfolio. We don’t have to raise money to fund that. We already have the portfolio. Against that portfolio, we are permitted to raise the infrastructure bonds. And then use that funding for any credit growth. We don’t have any target on raising infrastructure bonds. If the market is positive and gives us good rates of interest, we will keep accessing.

We should make products which are suitable for the customers or demanded by the customers. I think this is where the concern is emerging that whether this cross selling is also forced selling, whether proper selling is happening or not. We are working with all the stakeholders to address the issue of making the products available to the customers based on the appropriateness. Obviously, the concerns have to be addressed, but I don’t think they are mutually exclusive activities. We have to work out a mechanism together.

We are setting up a Centre of Excellence for assessing cutting edge technology projects. It is going to be in Mumbai as part of the project finance department. Our people will be trained in assessing financing of green hydrogen, battery storage etc. We will bring global expertise and ensure that this becomes the centre of excellence for the whole country.

Normally, we have a target to add 500 to 600 branches every year. What we are doing on the branch network front is an intense micro market study. Some of the new residential colonies where we are not present, we will be prioritising opening branches. We have done a very detailed micro market study and analysed where the branches are required to be opened. I think that will continue. With respect to people, I think our run rate is to add 7000-8000 employees every year and we will continue to maintain that level.