State Bank of India, India’s largest lender, will see improved cash recoveries from bad loans this quarter. In an interview to HT, SBI managing director B Sriram said the bank will pass on lower interest costs faster due to better implementation of the MCLR methodology. The government-owned bank will also hire about 10,000-15,000 each year.
How much will the retail customer benefit from the implementation of marginal cost of funds-based lending rate (MCLR) method to calculate base rate?
The MCLR is a clear formula and every month we have a review. There should be no ambiguity in passing on the rate reduction. The only thing is that this will be applicable for new borrowers and especially, there is comfort that customers will not change over a short-term of about six months or one year. So, while new customers will start to get the benefit immediately, old customers will get re-priced only when the renewals happen. Most of our loans are on a floating basis so accordingly customers will benefit.
What kind of hiring will you be looking at this year ahead?
Over the last four-five years, we have been hiring only to replace the retiring employees, so to that extent our hiring has been clear. Our total staff is around 210,000 employees and this will continue. The only difference is that there could be a time lag between those retiring and new hiring, so there could be some movement up and down. However, it will be purely restricted to replacing retiring staff.
What kind of number would that be?
Generally, about 10,000-15,000 employees retire every year and I am not sure of this year’s number but would be in that range.
As far as non-performing assets are concerned, what kind of measures have you taken? What kind of recoveries have you seen?
Every possible measure has been taken to recover. There has been a significant uptick in recoveries both in NPAs and in written-off accounts on a quarter-on-quarter basis in the last three quarters. We are hopeful this trend will continue.