State Bank of India (SBI), the country’s largest lender, is planning to reorganise its entire mid-corporate group (MCG), which currently has a loan portfolio of over Rs 150,000 crore.
As part of this effort, it will have two chief general managers (CGM) instead of one. “The proposal was cleared by the SBI board yesterday,” A P Verma, deputy managing director and group executive of MCG, told mediapersons here today.
According to Verma, the initiative has been mooted with a view to have a closer contact with customers, better coordination and faster business development.
SBI created MCG in July 2004 with an objective to extend relationship banking to mid-corporates with an annual turnover of Rs 50-500 crore. The group lends amounts ranging from Rs 10 crore to Rs 500 crore.
“By mid-January, we will appoint another CGM who will be based in Hyderabad and to whom the general managers of Chennai, Bangalore, Bhubaneswar and Kolkata will report,” he said, adding that the five regions were expected to grow faster than the other five regions of MCG.
MCG currently has 64 branches functioning under 10 regional offices headed by general managers who report to the CGM based in Mumbai. It has 6,500 clients.
Verma said MCG would expand its branch network to 200 over the next 18 months as it intended to have a presence in all the “top 100 business centres in India”. In 2010-11, the group's loan portfolio was expected to increase to Rs 175,000 crore. Its year-on-year (yoy) growth rate stood at 16-17 per cent.
Following the economic downturn in 2008-09, MCG restructured a large number of accounts. The outstanding of the restructured accounts was around Rs 15,000 crore. In the second quarter of the current financial year, the slippage amount stood close to Rs 800 crore. Of this, just three clients accounted for Rs 600 crore. “I, however, think that the worst is over with regard to non-performing assets,” he said.
Verma said credit offtake had not picked up in tune with the GDP growth rate. One of the reasons for this was rupee borrowing becoming costlier compared to external borrowing. Consequently, large corporates were changing their borrowing profiles.
Nevertheless, he envisaged further hardening of interest rates till March 2011. “We are getting into a situation where the so-called second generation reforms have to be ushered in,” he added.
Earlier, Verma inaugurated SBI's renovated Industrial Finance Branch , which was started here in 1989. It is stated to be the bank's biggest branch in the state with an yearly business of Rs 7,700 crore and a profit of Rs 148 crore.
