SBH plans to upgrade 100 extension counters in Andhra into branches

State Bank of Hyderabad (SBH), with 913 branches across the country and about half of them in Andhra Pradesh, is slowly and quietly taking big strides.

The bank, with a relatively new managing director at the helm, aims to improve its overall operational efficiency, introduce an early credit delivery mechanism and achieve growth in business and net profit.

In an interview with Business Standard, Amitabha Guha, managing director State Bank of Hyderabad speaks on the bank's short-term plans.

How was the performance of the bank for the first half of the current financial year?

Given the overall environment, SBH did well during the first half of the current financial year. Though the total operating profit was less as compared to the previous year, the bank did well in terms of interest earning on advances, which went up by 13 per cent.

The operating profit fell 31 per cent from Rs 470 crore for the first half of the previous financial year to Rs 357 crore for the financial year ended September 30, 2004. Though there was a marginal drop in deposits, advances grew by Rs 500 crore as compared to March 31, 2004.

What are your targets for the rest of the current financial year?

The plans for the rest of the financial year had to be modified slightly. When we started the current financial year, we had ambitious growth plans. We budgeted for Rs 4,280 crore in terms of deposits and Rs 2,900 crore in terms of advances.

However, the premise on which these plans were made underwent a radical change by the end of August. Though we sanctioned Rs 1,800 crore of new loans between April and September, the take-off was quite slow because of the competitive rates. At this time, we felt that the focus should be more on bottomline growth, and not just on topline growth.

How is your loan portfolio distributed?

We have a very diverse loan portfolio. The retail segment constitutes almost 40 per cent of the total portfolio.

As on October, the total advances was at Rs 13,316 crore. The agriculture sector has also seen a lot of activity. This year we have budgeted 30 per cent more to take care of doubling the credit to the sector over the next three years.

As per the Reserve Bank of India guidelines, we had to bring in 100 new accounts in the semi-urban and rural branches and we have 528 semi-urban and rural branches, which required us to bring in around 58,000 new accounts, but we have actually brought in around 90,000 new accounts.

We have also restructured 1.4 lakh agricultural accounts as per the new guidelines of the RBI.

Where does SBH stand on the disbursement to agriculture sector?

The agriculture disbursement constituted 11.04 per cent of our total advances as of October, which has improved considerably over March 2004 when it was only 9.39 per cent.

It is difficult as of now to meet the RBI guidelines of 18 per cent but we are working towards it and by the end of the financial year we expect it to be around 12 per cent.

What's your take on interest rates?

We were one of the few banks to improve our rate of interest even before the big players did. Though we announced it in mid-November, the new interest pattern would be effective only from December 1.

We had even announced the revision of domestic term deposits, which came into effect immediately. I personally feel that it is a temporary phase. Interest rates will be more or less stable in the short-term.

Can you explain your plans on technology upgradation and automation?

All our banks are automated on a standalone basis. As of today, we have 10 branches networked and by March 31, 2005 we would like to have 103 branches networked. The aim is to have all our 913 branches automated by September 2005.

The total expenditure on all the activities put together would be close to around Rs 85 crore. On the ATM front, we have 200 as of now and by the end of the current financial year we would be adding close to 56 ATMs.

Is SBH planning any branch expansion?

We are looking at branch expansion. The plan is to upgrade the 100 extension counters that we have in the state into branches. We plan to upgrade around 50 extension counters in the next six months and the rest next fiscal.

The internet banking facility of the bank is not transaction based. So, when do you expect to offer the full host of services?

Through the internet banking facility that the bank currently offers, one can check his balance and other information, but is not transaction based.

We have applied for the licence from the RBI, as the infrastructure and software is in place and we are hopeful of getting it soon.