With a new management in place, State Bank of India (SBI), the country's largest lender, is planning to focus on non-performing assets.

Managing director A Krishna Kumar, talks about the new management's priorities and challenges.

Though SBI has raised its market share, margins have come under pressure. Going forward, what strategy would you follow? Would your strategy be based on market share or margins?

Our strategy cannot be either one or the other. Definitely, it would consider both. Being the largest market player in India, we need to maintain our market share.

However, we cannot sacrifice our profits. We would have to look at how to improve our margins, while at the same time, dominate the market. There may be a few situations when we might have to sacrifice margins to get business.

Similarly, there could also be times when we would have to keep our margins strong and therefore, have to forgo some business.

Click NEXT to read more...

Do you think net interest margins would improve in the future?

I think they should rise in the short term. Within a year, we would look at improving the margins. Going ahead, we would also try to retain, if not increase, the market share.

What vision and priorities would the management have?

I don't think there would be any major change in the vision or the things that we have been doing in the last couple of years.

However, there would be more emphasis on certain areas. We have to be the country's best bank, with a sizable international presence.

Click NEXT to read more...

What is the biggest challenge in domestic operations?

Non-performing assets would be a focus area, both this year and the next. Another area would be to continue to get the support of our huge work force, numbering about 220,000.

We have to continue to have a high level of motivation and commitment from them. If these two are achieved, other visions automatically fall into place.

How do you plan to tackle the problem of increasing delinquencies?

Our challenge is to improve the quality of assets. For this, we need to improve our monitoring system.

Of course, proper appraisals and proper sanctioning need to be carried out, but it is the monitoring and the follow-up which is more complicated these days.

Click NEXT to read more...

SBI is yet to meet the 70 per cent provision coverage ratio norms. When would the norms be met?

The Reserve Bank of India (RBI) has given us time till September 2011. I think we should be able to meet the deadline.

What is the bank's expansion plan for the current financial year?

As far as business growth is concerned, on the liabilities side, we may see a growth of around 25 per cent. Our assets would rise 20 per cent this year.

We are looking at a target of 1,000 SBI branches 10,000 automated teller machines (ATMs) across India in the current financial year.

The thrust continues to be on opening brick-and-mortar branches. Even after the rise in the number of ATMs, the average number of hits in ATMs is 300. Also, the footfalls in branches have not declined.

Click NEXT to read more...

What new products would you introduce in the retail segment?

We are examining how to offer bundled products - like a basic home loan product bundled with something else. It is on the drawing board right now. The special home loan product was a success because it was needed then.

But now, two years have passed. So, we examined whether the same product is needed or not. With the new (home loan) product, we are still competitively priced.

Even while withdrawing that product, we have introduced a product which is as competitive as the last.

Click NEXT to read more...

A large number of people are retiring from the banking system, as well as from SBI. How are you tackling this?

About 30 per cent of our employees would retire in the next five years. So, one challenge SBI would face is to have succession planning at each level. To solve this problem, we have recruited many people over the last two years.

However, it would take some time for the new recruits to be ready to fill in the positions at senior levels. We may also need to look at to how to speed up the process of promotions to higher levels. For example, it takes 15-20 years for someone to become a regional manager. We have to reduce that time.

Are you concerned over competition from new private sector players?

Competition is competition, be it from the private sector or the public sector. We should know how to take on competition and perform better. We have to devise new products and find ways to stop poaching.

Click NEXT to read more...

The bank has had some issues with the regulator in the past few years.

We cannot afford to have issues with the regulator. We would continue to have very cordial relations.

What are your expectations from the annual RBI policy review?

There could probably be a rise of 25 basis points, not one of 50 basis points. A rise of 25 basis points would not hit credit growth because there is also a need for credit, since companies need funds to support their growth plans.