Arundhati Bhattacharya: Why should there be different set of rules for public sector banks?

Mumbai, March 20:  Arundhati Bhattacharya, chairman, State Bank of India (SBI), will create history on April 1 when all five associate banks will merge with itself — in the largest such exercise in the banking sector — to blossom out as a single entity. She created history in 2013 when she rose from the ranks and took over as the first woman chairman of the 211-year old bank.

In an exclusive interview, she tells Manju AB that her life’s journeys are never with a complete roadmap but with a conviction that challenges can be tackled and goal post is never too far.

Is it necessary for SBI to demand a high monthly minimum average balance (MAB) of Rs 5,000 in savings accounts?

Arundhati Bhattacharya: There is an interest of 4% paid on savings bank account. Suppose someone is earning a salary of Rs 15,000, then for three days his account can fall below Rs 5,000. If you have Rs 60,000 in your account, you can fall below Rs 5,000 for many days, so it is the average of all the days in a month. In the urban areas, it is Rs 3,000, and in semi-urban areas, it is Rs 2,000. In rural areas, it is Rs 1,000. The Jan Dhan is zero balance.

According to RBI data, the Jan Dhan accounts have deposits of Rs 74,600 crore giving banks a free float?

Arundhati Bhattacharya: Yes, these accounts have money, but there are no restrictions on withdrawing the money. We pay 4% interest on these deposits. Every account is accompanied by a RuPay card which cost the bank about Rs 68 and the ATM infrastructure has to be built where every transaction costs Rs 18 to be paid to the card companies. We allow five free ATM transactions to our customers if they are using other bank ATMs.

Was the cost of running the demonetisation too expensive? Some private banks had shut their ATMs after the government waived off all transaction charges?

Arundhati Bhattacharya: The cost of demonetisation is pretty large. During the time of the demonetisation, it was the PSU banks which served the people. In many places, only the SBI ATMs were open. We refilled the ATMs regularly. Though the government waived off transaction charges on ATMs, we had to pay the card companies. The sheer logistics of transporting so much cash was quite large. Why should there be extraordinary expectations from the public sector when we are in the forefront of nation building?

HDFC Bank recently claimed that they offer five-star services...

Arundhati Bhattacharya: I don't accept that the private sector services are five-star and our services are not. I do not accept that at all. No one complains when the private banks charge high rates. Penalty for not maintaining minimum balance in a private sector bank is anywhere between Rs 450 to Rs 790 per month while for us it is Rs 20 to Rs 100. Why should there be a different set of rules for the public sector banks? Our internet banking site is by far superior to the others. It is the fifth most visited financial site globally. You don't achieve this by running shoddy services.

What will be the role of SBI’s subsidiary, Infra Management Solutions (SBIIMS)? What is SBI’s real estate valued at? Are you open to selling a part of this?

Arundhati Bhattacharya: The real estate is valued at Rs 35,000 crore excluding the assets of the associate banks and about Rs 15,000 crore is added to our tier 1 capital. We are also open to selling our real estate in areas where it is in excess and unutilised. This company will be manned by engineers and construction specialists who will negotiate on our behalf and also look after the upkeep of these premises.

Are you worried for your loans to the telecom sector? Reliance Jio, for instance, is running the longest promotional scheme to capture customers. Have you spoken to the government?

Arundhati Bhattacharya: Not just for us, it should be a matter of concern for the government as well as they are also loosing revenue because of these schemes. We have not exactly spoken to the government in so many words. But we have flagged it off at various quarters that banks have a substantial exposure to the sector. When you have such schemes, there is an impact on competition. Quarterly results of major telcos are pretty impaired. So, it depends on how long these schemes will run. If it is for a short period of time, these people can surely weather the storm.

Any anxieties about the mega merger?

Arundhati Bhattacharya: We are all set for the merger. We already had a template as two banks were merged. So, we worked on the template left behind by our predecessors. Our books of accounts are merged. Relocation of banks and ATMs will happen as we expand our foot print into new areas. We may take some branches a few kilometers away from where they are now. Branches which are set up in clusters in the older part of the cities may be repositioned in the newer parts of the cities. I feel the younger people in the associate banks will be happier to be part of a bigger bank like SBI. The older lot may find it difficult to relocate, and so, we have a Voluntary Retirement Scheme (VRS). But, we are not forcing anyone.

The total NPA pile is likely to cross Rs 9 lakh crore at the end of March 31, and SBI has more than Rs 1.5 lakh crore...

Arundhati Bhattacharya: Post the merger, SBI may end up with Rs 1.6 lakh crore gross NPAs, according to the consolidated figures, we have up to December 31, 2016. We will meet the RBI deadline of March 31, 2017, to clean up our balance sheet. Resolutions will also happen.

But isn’t the issue about over-leverage? Bhushan Steel and Essar Steel would have about Rs 1 lakh crore of loans taken together, almost equivalent to the total stressed debt in the sector?

Arundhati Bhattacharya: Yes, which is why we are saying that there should be a valuation of these assets. We should take some pain. We should take some write-downs and also some conversion of debt to equity. Reduce the debt burden. There is no point running these accounts to the ground.

In the restructuring schemes like Scheme for Sustainable Structuring of Stressed Assets (S4A) and Special Drawing Right (SDR), the share prices soar initially, when the schemes are getting approved by banks and then plummet when banks take over part of the shares?

Arundhati Bhattacharya: If you look at the SDR scheme closely, the Securities and Exchange Board of India (Sebi) has already given an exception. The conversion of debt to equity is allowed at par value and it will not trigger an open offer if we go beyond a certain limit. We have requested these provisions to be provided for in corporate debt restructuring (CDR) and S4A. The 10% conversion of debt into equity in a CDR is too less.

You want the CDR terms to be diluted?

Arundhati Bhattacharya: Yes. Not necessarily be diluted but changed if you allow the Sebi formula for conversion to be allowed into SDR to CDR. It is not dilution. If bankers have the right kind of mechanisms, we will be able to turn around these units. What is the basis of seven-year turnaround in CDR? It should be more like the time given under 5/25 scheme

State Bank of India website goes generic New web address is www.bank.sbi

Chennai, February 20 (IANS): The State Bank of India (SBI) on Monday announced rebranding of its website as bank.sbi. According SBI, the new domain name bank.sbi is the highest domain protocol known as generic top level domain (gTLD), an official statement.

"The SBI group has several businesses. For those wanting to do banking or want to know about the bank it is easier to type out www.bank.sbi." M.K. Rekhi, General Manager -Social Media.

The SBI group having presence in insurance, mutual fund and card may also go for such Generic top-level domain (gTLD). With this, SBI has become the first banking organisation in India to use a gTLD for its online presence and providing an exclusive experience of assurance and security to its customers.

"SBI being the largest bank has always been the pioneer in adapting new technology. SBI has always believed in providing high-tech yet secure internet experience to its customers. Bank's own gTLD is another step in this direction," SBI's Chairman Arundhati Bhattacharya said in a statement.

Bank's own gTLD aims at simplifying the digital experience of customers and brings in enhanced security against phishing and lookalike websites. Due to its non-replicability, a gTLD site like ".sbi" conveys an assurance to the customer that the site is authorised, genuine and is not an inappropriate or phishing site.

The existing site of sbi.co.in will continue till customers get used to the new avtar of SBI's secure website.

SBI Group finalises plans for voluntary retirement scheme

Mumbai, February 19:  With State Bank of India (SBI) in the last lap of merging five associate banks with itself, SBI Group has finalised plans to launch a voluntary retirement scheme (VRS) which could lead to a lower headcount in the number of employees from the total employee base of 73,000 in the associate banks.

The Union Cabinet had last week cleared the merger of five associate banks — State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT) — with SBI. While SBI is yet to provide details of the branch rationalisation plan, an official of SBT has claimed that the merger plan could lead to closure of SBT’s 30 per cent of branches. While the five associate banks have 6,717 branches, SBT has 1,117 branches. “We have information that 204 branches have been identified in Kerala and 59 in Tamil Nadu,” an official said.

In a statement last week, SBI said, “The merger will result in creation of a stronger entity. This will minimise vulnerability to any geographic concentration risks faced by associate banks. This merger is an important step towards strengthening the banking sector.” A formal notification in this regard is awaited from the government wherein the effective date of merger will be indicated, SBI said.

The five associate banks have a total deposit base of over Rs 5 lakh crore and 8,964 ATMs across India.

The boards of associate banks have already approved the VRS plan, but they are yet to notify the number of employees eligible for the VRS, said an SBI official. “In view of the impending acquisition, your bank may consider implementing a VRS for employees as an employment-friendly initiative. The scheme would provide a good opportunity to employees who may genuinely want to retire voluntarily on account of the uncertainties related to possible relocation of job profile post acquisition,” SBI said in a letter to the MD of State Bank of Travancore.

The VRS scheme is open to those staffers who have put in 20 years or have completed 55 years as on September 30, 2016. It has offered ex-gratia amounting to 50 per cent of salary for residual period of service subject to a maximum of 30 months salary.

However, bank unions have said “closure of associate banks by mergers is unwarranted as these banks are in existence for very long in various states” and they have “sound financial fundamentals, commendable financial ratios, well-established branches and serving the people at large in rural, semi-urban and urban centres”. “Associate banks are premier banks in the respective states with sizeable market share and credit deployment to productive sectors. They are immensely financing agriculture, micro-small-medium-large industry, trade, service sectors at the regions and states,” said K S Krishna, general secretary, State Sector Bank Employees’ Association.

He said associate banks have been forced to give excessive provisions for the reason that those loan accounts with the associate banks — even though are standard assets — may be considered as NPA if the same group’s account with SBI is NPA. “When the associate banks made a net profit of Rs 1,700 crore in the half year of FY16, now the banks have been forced to show a loss of Rs 5,100 crore in FY17 half year. The operating profit has risen from Rs 5,000 crore in FY16 to Rs 5,600 crore in FY 17. With the announcement of merger, work in the associate banks has come to a standstill,” Krishna said.

In this time of need, SBI is your friend, indeed

Bank unions call for strike on February 28

‘Banks incurred huge costs incurred on

demonetisation, Jan Dhan & Aadhaar’

Coimbatore, February 7:  The United Forum of Bank Unions (UFBU) has given a call to its members to strike work on February 28.

The strike call, according to Thomas Franco, UFBU Convener and Senior Vice-President of the All India Bank Officers’ Confederation (AIBOC), is to voice their displeasure over the government’s indifference to their issues, which they contend “have accumulated and remain unaddressed.”

Alleging the government of remaining deaf to their plea even while they had stood by the government on different issues — be it handling the pain of demonetisation, implementing government schemes or opening Jan-Dhan accounts — the UFBU, represented by nine trade unions, said that “the government’s indifference had forced the employees and officers of various banks to take this extreme step.”

“We are on a war path after demonetisation,” he said, sharing a copy of the union’s 12-point charter of demands.

Demanding compensation for the losses due to Jan Dhan and demonetisation, Franco said banks incurred huge costs on account of opening 25 crore Jan-Dhan accounts, linking Aadhaar and providing RuPay cards.

“Demonetisation further added to the expenditure in various ways such as towards transit of withdrawn currency, security, disruption in regular banking activities and so on.”

Much of the issues were oft-repeated ones such as the demand to halt privatisation of public sector banks; amendment to the Gratuity Act so as to make gratuity uniform for all (Central government employees and those in the banking sector); appointment of employee director and officer director in public sector banks; recruitment; recoveries from wilful defaulters; and a stop to outsourcing of core banking business.

The UFBU Convener also insisted on the need for initiating immediate discussion on wage revision.

11th bipartite settlement – Charter of Demand for wage revision 2017 : unofficial

Although there is no formal news about the initiation of negotiations for next wage revision, 

the following charter of demand for 11th bipartite settlement is being circulated on whatsapp 

and emails and has been shared some whatsapp groups of employee unions. 

Details 11tth bipartite settlement

Bank Staffs Salary reduced by decrease of DA @ 0.90% from February 2017

Dearness Allowance now reduced by 0.90%

(Decrease of 9 slabs) from February 2017

Revised DA rate is @ 46.90%, from Feb-17 to April-17

The DA for November 2016 to January 2017 was 47.80%

Dearness Allowance for pensioners from

February-2017 to July-2017 is increased