‘Will focus on NPA resolution, credit growth revival’

MUMBAI: Rajnish Kumar, chairman-designate, State Bank of India on Thursday stressed that NPA resolution and revival of credit growth were his top-most priorities. Kumar, who will assume charge on Saturday, wasted no time and got cracking within hours after his formal appointment announcement, which came on Wednesday.

“We are already in discussions on how to revive credit growth, resolve NPAs. That discussion, we will try to bring it to a conclusion very quickly. And you will see some changes,” he said adding that asset quality would “look much, much better in future”. As of June 2017, SBI’s 12 per cent of the loan book turned bad ($35 billion).

In his first media interaction as chairman-designate, he said discussions were already underway. “In three years, you will see a bank, which has completely transformed itself,” he said. According to Kumar, the bank will review the bad loans situation and consider course correction if required. “Liquidation is the worst option as recovery will be the lowest. Hence, the decision will be based on what will derive the best value. So, the first aim will be to not reduce the enterprise value of the asset,” he explained.

Credit growth will be targeted to be 6-7 per cent and the bank will capitalise on its vast customer base of 420 million, besides exploring lending opportunities in sectors including the risky infrastructure sector.
Kumar, who replaces Arundhati Bhattacharya, known for implementing major reforms during her four-year tenure, also said the bank will reform its HR practices to attract talent and ensure succession planning.

On RBI’s proposal of linking interest rates to an external benchmark, he said, “Pricing of a loan product is not done based on the risk premium, which gets linked to the delinquencies, credit score and history of the borrower. Where the delinquencies are high and hence credit costs are high for the bank, we will necessarily charge higher spreads.”