Arundhati Bhattacharya, chairman of India’s largest lender with a group network of over 20,000 branches, State Bank of India, tells HT that stressed assets scenario is not hunky dory, but a lot of serious action was visible compared to a year ago. Excerpts:
What are your plans to turn SBI into a full-fledged digital bank?
Our demographic is such that even today, while 62% of the people are below 35, you still have the other 38% above 35. Touch and feel is very important for the people who are of a slightly advanced age. I am told, 80% of e-commerce is still cash-on-delivery. The reason is that the trust levels are really low in India. Not everybody is totally comfortable with doing money transactions on e-commerce platforms.
How precarious is the stressed assets scenario in SBI?
I will not say that everything is hunky dory. It isn’t. But there is a lot of seriousness in trying to get these things in line with expectations. Whether it be coming to us with projects, or ensuring that they get the right kind of money, we do see a lot more action, compared to a year ago. There are no magic wands and there are no panaceas to this whole thing. Our hope is that as we go forward and the economy starts progressing better, you will see things on the non-performing assets front getting better.
How many companies are you looking at to invoke Strategic Debt Restructuring (SDR) that allows banks to take control of a defaulting firm and effecting a change in management?
SDR will happen only when conversation is going on with somebody where there is a way out. It may not be a total buyout. It can also be a strategic sale (of assets).Otherwise, there is no point in doing an SDR. That is something I am trying to tell our people over and over again. I don’t think SDRs will happen by the dozen. We will do it where there is a fair chance that we might have a workout.
We have to see more mergers and acquisitions and deals. As deals happen, you will find that equity infusion will also go up. It will come from the private equity side, not necessarily from the foreign sources. There are still people in India, who have free cash. This is a very good time to pick up assets.
How much additional pressure does being designated a “too-big-to-fail” bank put on you?
We are a too-big-to-fail bank. We are the government’s bank. I don’t believe that the government’s bank can fail. No matter what anybody says, we don’t work on pressures. We hold a board meeting every week, in which the independent directors are present. We are still 22-23% of the economy. If we are not lending, the economy will not grow. We will lend because the economy should grow, people get jobs and people can be pulled out of poverty. It is necessary for us to lend. Whether, we have lent it to the correct people, well some calls can go bad. You also need to understand that the environment did not give its support.
What is your view on the government’s plans to incentivise debit and credit card transactions?
That would be lovely. We have been asking for that. Maintenance of cash is very costly. Cash is actually a very big burden. There is a question of counting, storing and circulating. All this gets taken out through electronic transactions. Not only that, corruption comes down.
What is the next stage for mobile wallet SBI Buddy that was launched in August?
SBI Buddy is doing very well. This will be made available on feature phones as well in the next three months. The end-state would be that people will be able to do everything that they do through the branch today through the wallet. A direct e-commerce platform such as Snapdeal or Amazon is something we haven’t thought about. But, we definitely want to have a place, where you should be able to access everything once you get in. The market place will be tied up behind it.
What has been SBI’s experience with the Jan Dhan scheme?
Our zero balance accounts have come down to about 40%. We started with 97%. We need to now work out whether there are duplicate accounts. Duplication could be on account of miscommunication to people that they would get advantages if they had multiple accounts. Many more Jan Dhan accounts will get activated when more direct cash transfer of welfare schemes comes into system.