Top priority is to keep NPAs under control, says new SBI chief
Mumbai: Newly appointed State Bank of India Chairperson Arundhati Bhattacharya Tuesday said her "top priority" is to keep bad loans under check and underscored the need to use more IT-driven solutions to address stress in the system.
"There is no doubt in our mind that NPAs (Non-performing Assets) remain the top priority. It will remain a top priority...(as long as) we see the stress being around," she said at her maiden interaction with media as Chairperson here this evening.
Alluding to her immediate predecessor Pratip Chaudhuri's declaration of the bank fighting a war on NPAs, she said, "I think nobody can say the war is over. If anything, we are going to make the intensity much, much more serious.
"To that extent, we have to ensure that whatever is done, we do it better and also we use a lot of other weapons to control NPAs."
SBI's gross non-performing assets rose to 5.56 percent, among the highest in the system in the June quarter.
The 57-year-old Bhattacharya, who was yesterday appointed the first woman head of the 207-year-old bank, said SBI will use a lot more of IT tools to bring NPA numbers down. She said the bank will soon be launching an IT platform in this regard.
Bhattacharya, however, said she does not possess any "magic wand" to solve the problem in the next quarter or two, stating the bank is a proxy to the turbulent economy and hence, the stress will continue. But she said there is no alarm rising on the NPA front as the economy has shown signs of improvement.
Citing the ongoing final audit for the September quarter and the 'silent period', she declined to give any projections.
Bhattacharya said the top Government lender has under- utilised the information technology architecture when it comes to dealing with NPAs, and it will leverage on the benefits of the same to get a grip over stressed assets. "We will be using IT much more. I think we have not leveraged it fully enough."
Focus will be devoted for NPA management and how to cut down the time taken for resolution of NPAs, she said. "Once the NPA issue is managed, we will see an improvement in all other ratios like return on assets and return on equity."
Asked if SBI's forthcoming results would have some "shock" element for markets, Bhattacharya declined to give a direct answer, saying the numbers will give a "fair and transparent" picture of the bank's position.
SBI shares had tanked over 8 percent after the bank reported over 90 percent fall in net profit to Rs 20 crore in the March 2011 quarter, after Pratip Chaudhuri took over the reins from O P Bhatt.
Citing the Rs 600 crore hit SBI took due to the revision in pension provisioning norms for the June quarter, Bhattacharya said such surprises can impact the numbers.
On wilful defaulters, the SBI chief endorsed the Finance Ministry's and RBI's suggestion that promoters have no right to continue at the helm, but said there are practical issues in bringing about a change in the management.
"I want to reiterate that there will no soft-peddling on tracking down wilful defaulters. This is visible in our higher recoveries. Going forward, we will increase our resolve on this. But if you ask me whether I have an enabling environment for this, I will not say yes, as so many agencies are involved."
Asked about the bank's fund raising plans, she said, they will take a call on hitting the market once a clear picture emerges on recapitalisation front from the government.
However, she said even without any infusion and additional funds, the bank can go on this fiscal comfortably.
The SBI chief said interest rates will stay high till inflation remains elevated. "Interest for consumers can come down only when the repo rate is cut. But the inflation is treading up, I don't see that happening anytime soon."
Given the current scenario, there is case for a cut in the deposit rate but the bank's asset liability committee will take a final call on the matter, she said.
Bhattacharya endorsed the need to have a bank large enough to take on the largest in the world and be among the top ten, which would be truly representative of the economic aspirations of Indian corporations.
It is necessary that SBI merges associate banks with it at the earliest, Bhattacharya said, adding but there are many issues involved in carrying out such exercises.