A Riveting Insight into Retail Banking
Mumbai: K V Haridas, Deputy Managing Director, Retail Business, State Bank of India, the banking colossus having a whopping 44 crore customers, is the highest ranking Malayali in SBI. With 17 circles under him, each headed by a Chief General Manager (CGM) based at respective local headquarters, Haridas looks after SME, Personal Banking, Real Estate & Housing, Agri Business, NRI Business, Wealth Management (SBI Wealth) and Customer Value Enhancement (cross selling across the businesses) verticals.
He is among State Bank of India’s (SBI) top management team steering the banking colossus which, after the merger of the associate banks, has a 44-crore-strong customer base. As the Deputy Managing Director in charge of the retail business of the Bank, K V Haridas, who, incidentally, is also the highest ranking Keralite in the SBI hierarchy, is looking after a number of portfolios and leading a large team forming a vast chain of command spread all over the country. This down-to-earth banker, a stickler for ethical banking practices, finds time to speak to Destination Kerala touching upon the entire gamut of retail banking despite his hectic schedule
This down-to-earth and highly approachable Malayali hailing from Trikaripur in Kasaragod district, who calls himself a “24-hour banker”, places very high emphasis on personal integrity and always prefers to uphold the rule book.
Having a fruitful banking career spanning over almost three-and-a-half decades, Haridas joined State Bank of Travancore (SBT) as a Probationary Officer in 1984 after graduating in Physics from Payyannur College. On being promoted as DGM over the years, Haridas moved out of his parent bank SBT, as per the State Bank Group policy, and joined State Bank of Hyderabad, managing its treasury operations based in Mumbai (2009). His next promotion took him to State Bank of Bikaner and Jaipur (based in Jaipur) and the subsequent promotion as CGM saw him working for State Bank of Patiala in Patiala. Again, promotion as DMD in November 2016 brought him back to Mumbai.
A quintessential Malayali, born to middle class parents – his father was a UP School headmaster and mother a housewife – Haridas plans to go back to his home State Kerala after retirement, which will happen in one year. "There will be a lot of opportunities after retirement. But for me, more important is my roots. So I will go back,’’ says a nostalgic Haridas who keeps himself abreast of all the developments in the political, social and cultural landscape of Kerala even while managing a very hectic professional schedule in faraway Mumbai.
Very unaffected, this top-notch banker, who considers himself as a ‘‘Communist at heart’’, for he believes in ‘‘human equality and respect for individual’’, says that he is the beneficiary of SBI’s philosophy of grooming leaders. “They allow us to change departments and learn more. There are proper L&D and succession plans. Six MDs from SBI went to public sector banks last year is a reflection of that,’’ Haridas says.
Destination Kerala met him a day after Q1 2019 results of the Bank were announced.
“We do not look at market expectations. Bank has got a very focused approach to business and balance sheet. It is not profit of current quarter that we focus on. How to strengthen the bank in the medium and long-term is our focus. We monitor stress in our portfolios and build up provisions so that bank is covered appropriately for any future happenings also. We have a strong foundation. Our health is also a benchmark for the health of the Indian economy,’’ Haridas said beginning the conversation.
Our provision coverage ratio is 79.5 per cent. That means Rs. 79.5 is kept aside for any loan of Rs. 100. If there is a shock, we have to bear only 20.5. This is one of the highest in Indian banking scenario. We are building up provisions and strengthening businesses, and looking at how to increase operating profit. Our operating profit is 30 per cent YoY after removing special items.
Our NPA is only 7.5 per cent. Large number of accounts are in NCLT. For most of these accounts, we have already provided more than what is required. Even if we have to take a haircut, we have enough comfort, and probably the money will come back later to add to our profit. The resolution has to happen quicker at NCLT.
‘’For a country like India, we require a few big banks which can compete globally. We have cooperative banks, payment banks, small finance banks, grameen banks, MFIs, NBFCs, private sector banks, big-sized private sector banks and then public sector banks. We require a few big banks to take the country forward when we are aiming to become one of the top three or five economies in the world,’’ Haridas says.
Here are the excerpts from the interview:
State Bank of India’s FY19 results came out recently and it posted a profit of Rs. 838 crore. SBI had posted a loss of Rs. 7718 crore in the fourth quarter of FY18. Now, a higher income from its retail banking business has significantly contributed to its turn-around. What was your strategy? How did it improve asset quality?
In the Agriculture segment, we gave added focus to risk-mitigated products. We also tied up with various corporates for financing their suppliers, i.e, farmers, for a comprehensive connect. We also launched innovative initiatives like ‘Chai pe charcha’ and ‘Charpai pe charcha’ to engage and connect with the farmers.
Being the market leader with the best products and finest interest rates, our focus was on enhancing the quality of our service and delivery systems. We have an extensive sourcing system supported by a large network of Central Processing Centres, which take the customer through a seamless journey. We also have tie-ups with all the prominent builders across the country.
Coming to personal loans, we have about 1.3 crore customers whose salaries are coming to the account with our bank. Our flagship product, Xpress Credit, aimed at such customers is a resounding success with a growth of 41 per cent during the last FY. We have connect with all the elite educational institutions in the country, to whose students we offer Scholar Loans at a low rate. For students going overseas, our Global Ed-vantage Loan is the best offering in the market.
In SME Loans, our 500 SME-intensive branches, fully equipped with sufficient number of Relationship Mangers, provide necessary guidance and support to new and existing entrepreneurs. We also have a cluster-based approach at select centres and over 60 tie-ups with industry majors (IMs) under Supply Chain Finance. Besides garnering SME business, this has been instrumental in penetration of the bank into the entire ecosystem of these IMs. Our Centralised Processing Centres ensure that the customer requirements are handled promptly.
In addition to all these process improvements, we have also made a huge digital presence in all segments, with the focus on customer delight. Most of our digital products are entirely seamless, with no need for visiting a branch. Even in other cases, where in-principle approval is given digitally, the customer needs to visit the select branch only for documentation.
We have set up a Credit Monitoring Department at Corporate Centre with exemplarily committed officers and war rooms in all 502 Regional Offices across the country to manage, monitor and recover stressed assets. With seamless connect with all the 17 Circles, the process of maintaining asset quality got a huge focus resulting in manageable NPAs.
SBI’s retail segment comprising personal and household, agriculture and SMEs, has 58 per cent share in total loans while corporate loans account for 42 per cent. What is the kind of growth you are looking in the current fiscal? Given the challenges being faced by NBFCs, do you see a huge opportunity in retail for the bank?
As of now, Retail segment has 59.50 per cent share in total advances and it is growing at an excellent pace. In percentage terms it may continue around that level, given the fact that we have the majority share in corporate lending in the country. Risk-mitigated loans, more and more products through digital process and quality enhancement of digital delivery processes will be our focus areas for the future.
We have a big connect with NBFCs, either by way of direct support or by way of buying their asset pools. Given the challenges faced by NBFCs, we are in continuous dialogue with them. NBFCs also have an important place in the ecosystem, because of their feet on the ground, in funding the last-mile customers. So I would say the need is for increased collaboration. In this regard, we have already initiated tie-ups with NBFCs for financing through the co-origination route, given the fact that the NBFCs have trained staff for monitoring assets & collection process and their operational expenses are comparatively lower.
How is falling auto sales affecting the Bank’s loan portfolio? Recently, MG Motor India signed MoU with SBI for the latter’s Electronic Dealer Finance Scheme (e-DFS). What are your expectations from this tie-up?
Every industry has its ups and downs. Auto industry has not performed well during last financial year, and in the current FY 2019-20, demand is still subdued. However, with the festival season coming, things are expected to turn around. We have dealer finance tie-up with all the major players. With MG Motor, the dealer on-boarding is in full swing and like other dealer finance connects, here also we see a big business opportunity.
SBI has recently slashed interest rates offered on car loans for electric vehicles. What’s been the response? What is SBI’s outlook as far as this segment is concerned?
The market has taken this initiative very positively and we have got very positive feedbacks on the same. We have launched a very attractive car loan scheme called Green Car Loan for electric cars. We have kept the rate of interest on electric cars 20 BPS less than regular car loan. We also have waived off processing fee till December 31, 2019 on Green Car Loan. The repayment period in this scheme is eight years compared to seven years in regular car loans, as generally the lifetime of an electric car battery is eight years.
- Hyundai has come up with a new electric car KONA in July. Mahindra & Mahindra and TATA are already there in the electric car market and many other OEMs have announced their plans to get into electric vehicle segment.
- The Govt. of India has launched new schemes and incentives for the purchase of electric cars in 2019 budget.
- In the coming years, electric vehicles will be the norm and SBI is an early starter to support both the Govt. and OEMs in this initiative.
Kindly share the details of SBI’s unsecured lending and credit cards business at present. There are reports that SBI is planning to list credit card business in FY20. Kindly share more details.
Unsecured Loan Portfolio (Xpress Credit and Pension Loans) reached the level of Rs.1,25,965crore as on March 31, 2019. Higher growth is targeted encashing the opportunities with large customer base leveraging technologies.
With around 9 million cards, SBI Card has maintained 40 per cent-plus CAGR over the past five years in credit card spends, which is significantly higher than the industry benchmark. Currently, the company holds 17 per cent-plus market share in cards and continues to grow at a healthy pace while maintaining portfolio quality standards. The decision to go public will be taken by the SBI and SBI Card Boards at an appropriate time.
How are SBI’s digital banking initiatives helping growth of retail segment? Please share details with regard to migration of customers to digital banking channels? What is the share of transactions carried out through SBI’s latest app YONO?
- SBI has enabled collections and payments for passport fee, GST refunds, GeM, Smart Cities, Metro, relief funds, electronic toll, rail ticketing, educational institutions, Trusts, corporate, hospitals, SHGs etc.
- 90 per cent of the total transactions are on alternate payment channels, out of which 48 per cent are exclusively put through digital banking channels.
- Over 6 lakh-plus POS touch points with 16 per cent market share in total ecosystem. SBI remains the largest debit card issuer with over 250 million cards.
- 24x7 availability of digital payment channels – PoS, ATMs, Mobile Banking, Internet Banking, UPI etc. has reduced the dependency on branches and made banking a convenient and comfortable experience.
- Most of our retail products have moved or are moving to the digital space providing great convenience and ease for the customers. The traction in such a short time is unbelievable.
- YONO is one-of-its-kind in the world. Bankers across the globe were awed by YONO, which according to them, was a huge surprise from a PSB stable. It was an acceptance of SBI as one of the top-rung digital banks.
- A year-and-a-half since its launch, YONO has already generated significant value for the bank in terms of business growth, new customer on-boarding and customer engagement.
- YONO has achieved 25-plus million downloads and 10.2-plus million registrations till date. Over 1.5 million users login daily.
- We saw significant momentum in new customer on-boarding with 25,000 digital accounts opened per day which was over 75 per cent of all eligible accounts being opened by the bank with 30-40 per cent higher balances than regular accounts.
- YONO is the fastest growing and a major channel for personal loans. YONO has a completely paper-less, four-click process for Pre-Approved Personal Loans.
- The non-banking financial services product suite i.e. insurance, mutual funds etc. are achieving all-time highs on a monthly basis.
- The marketplace has also been very successful in getting us engagement from our customers. 25 per cent of customers who log in on a monthly basis do so to access the marketplace. For these customers, 45 per cent of the time spent on the app is on the marketplace.
What all changes will happen in SBI’s retail banking segment in the near future with increase in application of advanced technologies?
SBI is not new to challenges. At every turn of decade, a new challenge has come up, and the bank has the inherent strength to meet all those challenges. In fact, you have to visit our IT Centre to really understand our capabilities. We have state-of-the-art systems and processes with multiple firewalls to secure data. We also have our own highly competent technology team in all advanced areas and also have collaboration with the ‘best in the world’ IT partners.
I expect YONO to be a game-changer. Being a next generation digital initiative, it envisages a seamless omni channel experience for banking/financial needs and daily/lifestyle requirements of the customers on a single digital platform. Digital Bank, Financial Superstore, Online Marketplace (B2C and B2B) and e2e digitization of core processes are the key transformative initiatives to bring about a paradigm shift. It is going to give us a definite edge in our Retail Business initiatives.
Two years since the merger of State Bank of Travancore with SBI, how do you evaluate Bank’s performance in Kerala market? How big is Kerala market for SBI?
Kerala Circle has made good progress after a few months of integration time. Business is growing steadily. The Circle is very important in our scheme of business as our associate E-SBT was considered as the ‘bank of Kerala people.’ Now, the merged State Bank has stepped into that role with better products, finer interest rates and enhanced reach. We provide the maximum support to all the government companies. I expect SMEs and housing/personal segment to be the growth drivers going forward. Being the most literate State, the adoption of YONO and digital products is one of the highest in the country. The focus is to make every delivery point a centre of excellence.