Maintaining asset quality, protecting net interest margins (NIMs) and continuing on the path of digitisation are the three priorities set by new State Bank of India (SBI) chairman Dinesh Kumar Khara on his first day in charge of India’s largest bank.
“We have been monitoring cash flows very closely and whatever we have seen in terms of stress is not a cause of concern for us. Our legacy accounts have been provided for with a overall provision coverage ratio of 83% so there is no big concern. The RBI’s restructuring framework is quite liberal and we will be able to handle the situation. I don’t think it will be so much of a challenge,” Khara said.
SBI’s gross NPAs as of June 2020 was 5.44% down from 7.53% a year ago and net NPAs post provisioning was 1.86% down from 3.07% in June 2019. Its NIM was 3.01% up from 2.81% a year ago.
Khara said he was cognisant of the bank’s provisioning requirements as and when required and will continue to make upfront provisions when required.
Khara was managing director incharge of the bank’s global banking and subsidiaries before being appointed by the government on Tuesday.
He has been with SBI for 36 years starting as a probationary officer in 1984 he rose through the ranks and was CEO of the bank’s mutual fund business before taking over as one of the three MDs in SBI in August 2016.
In his stint at the bank Khara has gained experience in all facets of banking namely, retail, corporate, credir and international banking. He was incharge of executing the merger of SBI with its five associate banks and Bhartiya Mahila Bank that help the bank join the league of top 50 banks globally.
Khara said enchancing the bank’s digital capabilities and network will also be one of his priorities.
“Our Yono app is beyond banking and is now a financial super store with ecommerce. We will continue enhancing our digital capabilities. Regarding monetisation of Yono we will share our plans at an appropriate time,” Khara said.
Analysts said maintaining growth while ensuring stable asset quality post Covid will be a challenge for the new SBI chairman in the short term.
“Especially post Covid this uncertainty on asset quality has increased. But SBI’s high provisions and the fact that he comes from within the bank hirerachy is a matter of comfort because it means we may not see a kitchen sinking of bad loans due to the change in leadership,” said Lalitabh Srivastawa, analyst at Sharekhan a BNP Paribas owned brokerage.
Khara said he plans to use the bank’s large base of employees with a tech background to analyse and sharpen the bank’s operations.
He said the bank is not in a hurry to raise equity capital and will use Tier I and Tier II as modes to raise funds immediately. “We are in a comfortable position in regards to capital and will reach out to the capital markets as and when required,” he said. SBI’s capital adequacy at the end of June was at 13.40% above the 9% mandatorily required.