Pratip Chaudhuri is concerned about the bank’s high level of NPAs; plans international expansion 

Pratip Chaudhuri, the newly-appointed chairman of State of Bank of India (SBI), has said that it will be his aim to make the bank the leader in the retail segment, to reduce the bank's non-performing assets and expand its reach in the international market.

"My priority will be to make SBI the leader in the retail segment, amalgamation of associate banks, reduce NPAs, focus on international expansion, increase branches and ATM channels, improve technology and of course to give more attention to my employees," Mr Chaudhuri said at a news conference in Mumbai on Friday.

Mr Chaudhuri said, "There would no major shift in gears, the growth path that we have will continue. Our bank is a successful corporate bank. Our retail expansion would continue at the current pace and we will work to consolidate our position to become the leader in the segment. We will pay more attention towards improving deposit-taking activity to ensure optimal cost of funds. We will also take efforts to ensure that all branches are sufficiently manned."

SBI has reshuffled the portfolios of its top executives. Mr Chaudhuri also announced SBI's new management team. Hemant Contractor will be managing director of international banking, R Sridharan, the existing managing director handling associates and subsidiaries, will continue to hold this portfolio. Diwakar Gutpa will be chief financial officer, while A Krishna Kumar will be managing director-national banking, which primarily includes branch network and retail.

Banking consolidation in the country is limited to the private sector and SBI intends to change this picture. The bank will be aggressive on amalgamation in the future.
 
"We will continue our process of amalgamation of associate banks more aggressively without hurting depositors' interests, as we have enough experience of it. We did one merger every two years," Mr Chaudhuri pointed out.

Right now, the high level of NPAs is the main concern of the bank. SBI's level of NPAs is growing slightly faster than the industry average. Its gross NPAs for the October-December 2010 quarter stood at 3.17%, while net NPAs was 1.61%.

"There has been a bit of concern over the high level of NPAs on a comparative basis, but we will take adequate measures to ensure that the NPA percentages are better than the industry average," Mr Chaudhuri said.

Speaking about SBI's special home loan scheme, Mr Chaudhri said, "We will continue the scheme, but we will also review it from time to time and then we will take a call on whether to revise it or not. SBI's home loan scheme has provided homes to millions of people and that has given us leadership position in the home loan business. The regulator has asked for higher provisioning on such loans, but we will be in talks with the Reserve Bank of India and the final course would be a compromise which will address delivering value to home owners and the RBI's concerns."

SBI will also take concrete measures to increase its market share, but not at the cost of profits. The bank will lay emphasis on increasing the tenure of loans to improve returns, as it has found that short-term loans fetch lower returns.

SBI sees the telecom sector as a sunrise sector and it has started considering new proposals. "The telecom sector is a sunrise sector and we have approved a Rs1,000 crore loan for a leading telecom company. It is a good business and we don't want to miss the opportunity," Mr Contractor, who will head international banking, said.