As the managing director of SBH, how has the journey been
When I took over, I had identified two to three areas as my priority. The primary objective was to leverage technology and increase the portfolio, besides laying emphasis on the retail segment. On the one hand, we formed separate verticals to focus on every segment falling under the overall retail portfolio including housing loans, vehicle loans and MSME. General managers were given one segment each of the retail portfolio and they, in turn, created a list of critical branches which needs focus for better marketing and management of business. On the other hand, we expanded the branch network to broadbase the bank.
All these initiatives have paid rich dividends for the 68-year-old bank. From a level of Rs 2,800 crore in March 2008, the housing loan portfolio has grown to Rs 4,734 crore now, vehicle loans moved up from Rs 364 crore to Rs 864 crore and the MSME segment has grown to Rs 8,280 crore from Rs 5,042 crore in March 2008. This year itself, the MSME segment has grown 32% while the housing segment has improved by over 36%.
The bank has been growing year-on-year. Last year, our advances and deposits grew by close to 25%. But, this year, because of the economic slowdown that impacted the credit offtake, the increase is only to the extent of 20%. Our deposit growth was 24% last year and this year it would be around 18%, and that is because the bank had consciously shed bulk deposits.
The cost of deposits (CD) has come down from 6.97% last year to 6.19% this year. The CD ratio has improved from 68.44% last year to 71% this year. The expense ratio is now at less than 40%, one of the best in the industry, at least among public sector banks.
The net interest margin has also improved to 2.86% from 2.43% in March 2008. The bank has been able to contain its non-performing assets and has, over the period, improved its market share in both deposits and advances.
What is your take on the market situation Do you see better credit offtake in the current fiscal
There has been a lot of requests for credit from the infrastructure sector, particularly power. But that would take some time to reflect on the banks balance sheet as they are long-term loans. However, there are not many enquiries from other sectors, as companies are not contemplating expansion plans. But there are some positive signs and we hope the credit to pick up in the coming months.
The talk of merger of SBH with State Bank of India has not died down. What is the status on that Has it affected the employees
The merger will happen whenever it has to happen. I do not have any comments on the merger issue. The talks have not affected morale of the employees at SBH.
What are your growth plans for the current fiscal Would you be mulling recruitment
The bank has put in place better systems now and has created a lot of awareness so we should be able to perform better in the coming years. Cross-selling of products is what we want to do more. The bank had a good workforce. But there was inadequacy in terms of skill sets. So, last year, we did campus recruitment from management institutes and also took on roll some agriculture officers. These people helped us grow the retail book and also better our agriculture recovery. Besides, we recruited some 1,600 clerical staff and some credit analysts to do specialised jobs. This year, we plan to add 674 probationary officers, 300 rural probationary officers and 2,000 clerical staff.
Simultaneously, SBH is also working on its branch network. We added 150 branches last year on a base of 1,000 branches. This year, the plan is to add 200 branches including branches in coastal areas. We will be foraying into two new statesUttarakhand and Chhattisgarh. Right now, the bank is operating in 16 states. We hope that the branch expansion plan, coupled with the human resource development programme, will help us take the bank to the next stage of growth.
SBH is entering newer areas and one of them is financial inclusion. As part of the initiative, it has started issuing smart cards in five districts of Andhra Pradesh. We propose to use that route to market our own products like deposit accounts, loans, recurring and fixed deposits schemes, etc., to people who do not have access to any bank branch currently. We will use the business correspondence and business facilitators method to reach out to these people. SBH has arrangements with TCS, HCL and Coromandel for technology and business correspondence support for this project.
For the year 2010-11, we expect at least 20% overall growth in our business. Our retail portfolio is growing very well and the idea is to build on the momentum that has been built already. SBH had opened 450 ATMs last year and plan is to add similar numbers in the current fiscal.
Are there any new initiatives planned by SBH
We recently started the online vendor management system. The system is used for invoice management and vendor financing. It was started on a trial basis, but we will roll it out more aggressively in the coming months. We will move all our vendors on to the system. It is completely paperless and the idea is to reduce the turnaround time to a great extent. SBH also proposes to start selling gold coins. It is awaiting RBIs nod for the purpose.
Some time back, the bank had appointed a mid-corporate deputy general manager who sits in the head office in Hyderabad to focus on the MSME segment. This DGM has industrial estate branches and other branches which focus on the MSME segment directly reporting to him/her.
By creating this vertical, we have cut out a layer and this should make the system and procedure even better. And our customers will get closer to the bank. Right now, six branches have been brought under this vertical. The plan now is to take it up to 15 this year and enhance it over time.