SBI for two-pronged strategy to boost credit growth by 2020

SBI chairman Rajnish Kumar said the bank proposes to take up internal reorganisation of corporate banking.

The country's largest bank, State Bank of India, has planned to pursue a two-pronged strategy comprising portfolio reordering that will reduce the credit risk-weighted assets (CRWA) to total advances ratio.
 
The move is aimed at achieving a healthy credit growth of 10-12 per cent by 2020. 
 
SBI chairman Rajnish Kumar said the bank proposes to take up internal reorganisation of corporate banking. 
 
A report by Businessline says through portfolio re-ordering, CRWA to total advances ratio declined by 780 basis points to 71.14 per cent as on 31 March 2018.
 
CRWA can be lessened by funding those assets that have less risk, thereby requiring less capital to make the loan and/or by shedding assets that carry higher risk.
 
The report said the gross advances of India’s largest bank grew at 4.91 per cent to ₹20,48,387 crore by March 2018 from the previous year’s level of ₹19,52,507 crore.
 
“Overall, personal retail loans grew by 13.55 per cent in FY2018, which is in line with the bank’s strategy of growing more aggressively in this segment,” said Kumar in a communication to shareholders, as reported by Businessline.
 
One step is the revamping of the corporate credit structure and system within the bank. 
 
The aim is to widen the universe of clients and focus on new segments.
 
The Corporate Accounts Group (CAG) will focus on high priority and quality individual and group relationships. 
 
Also, the concept of group relationship coordinators will be introduced.
 
“CAG will offer an end-to-end solution to high-quality large corporates focusing on fee income, project finance and supply chains around large corporates. The credit risk management function will also be strengthened by on-boarding sector specialists and improving due diligence,” elaborated the SBI chief.
 
Kumar observed that the threat of competition from market competitors cannot be taken lightly, and the bank will leverage its balance sheet strength and pricing power to optimise the risk return matrix.
 
Another strategy is related to HR, which needs a fresh look, with the increasing adoption of advanced digital technology such as Artificial Intelligence (AI) and big data increases within the bank. 
 
Hence, the bank will lay emphasis on upgrading the skillsets of employees.
 
“Given the pace of retirements in the next five years, it is important to put in place a robust plan of succession. Potential leaders will be identified and mentored through customised training programmes to create a strong leadership pipeline," said Kumar, adding, “Some of these works are already in progress, and concrete action plan will be implemented in the next two years.”
 
Source: Businessline

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