Central Bank of India chairman and managing director S Sridhar ’s 11th floor office at Nariman Point offers a lovely view of the sea. The interiors of his sprawling office are, however, quite spartan, but what really stands out is an array of statues of gods and goddesses, besides a replica of the Golden Temple. If Sridhar is looking for divine intervention, he perhaps has got it.
Ever since Sridhar took charge in March 2009, the bank’s net profit has nearly doubled to Rs 1,066 crore (as of March 2010) from Rs 570 crore a year earlier. This came on the back of a 20% rise in the total income to Rs 13,821 crore from Rs 11,541 crore from a year ago.
An alumnus of IIT Delhi and Jamnalal Bajaj Institute of Management, Mumbai, Sridhar has about 36 years of commercial and developmental banking experience, having worked with the State Bank of India, Exim Bank and the National Housing Bank (NHB), among others. And he now dons two hats. Apart from being the top boss at the Central Bank, he has been the CMD of NHB since April 2006.
The Central Bank was set up in 1911; and in 1926, it was merged with the Tata Industrial Bank. At that time most banks were set up and run by expatriates. However, the idea behind Central Bank was to have a lender set up and run by Indians — the first bank in India with a true Swadeshi flavour.
So from the very beginning, it was projected as a Swadeshi institution. At the time of bank nationalisation in 1969, it was the No. 1 nationalised bank (the Imperial Bank became State Bank of India, a nationalised bank, in 1955).
In its centenary year, Sridhar wants the swadeshi focus to continue while he introduces new technologies and processes to make banking more pleasurable, broad-based and with an appeal for the youth. Besides, he is also championing rural housing and affordable housing as the head of NHB. Excerpts from the interview.
The bank will soon turn 100. What’s your vision for the bank in its 100th year?
I want it to be a full service bank, for every type of customer. It has to be a contemporary bank, an expertise-oriented bank. Our customers should be at the heart of all our businesses.
Besides, I aim to bring young customers into our banking fold. We are taking several steps to that end, which includes leadership training for our mid-to-senior level managers. We are de-layering the bank by having a large corporate vertical and a mid-corporate vertical.
We have also created a bad loan recovery vertical where we are using legal moves as well as negotiating settlement of NPAs. In this area, we have done some major work, mainly in the field of corporate debt restructuring. Last year we had the best yearly recovery figure ever. We recovered Rs 650 crore worth of bad loans.
What have you planned for the centenary year?
We have just started our annual lecture series — Sir Sorabji Pochkhanawala Memorial Lecture — by eminent Indians.
The first lecture was by Kamalesh Sharma, the Commonwealth secretary-general. We also have two main themes for our centenary year — youth & sports and health for the disabled.
Central Bank is considered an old-age bank. My idea is to change that perception by getting a large number of youth as our customers by using the centenary celebrations platform to reach to them.
We have also signed up as the official banking partner for the Commonwealth Games in Delhi this October.
Besides, we are also associated with football in Kolkata, the Nagpur Marathon and SPICMACAY (Society for Promotion of Indian Classical Music and Culture Amongst Youth). For the second theme, we are working in association with Sankara Nethralaya
A number of banks are raising Tier-I capital. What are your own plans to raise capital?
The bank will get Rs 2,060 crore from the central government for its contribution in our forthcoming rights issue, and another Rs 500 crore from the public shareholders.
So nearly Rs 2,600 crore will be infused in the bank in the form of equity. So, with that our capital adequacy and capital position of the bank will be considerably stable.
As of March 2009, the bank’s capital adequacy ratio was 12.84%. The rights issue will happen in the current financial year but the dates have not been fixed yet.
You also head the National Housing Bank. What is your focus area at NHB now?
For NHB, affordable housing is one of the main focus areas. Way back in 2006, at a CREDAI (the Confederation of Real Estate Developers’ Associations of India) conference, I had proposed the need for affordable housing and the need to have a Rs 1-lakh house.
For India, the need of the hour is to have affordable housing. We contribute to the area of affordable housing through banks and housing finance companies (HFCs).
The rural housing and financing of rural housing are the other focus areas. For housing in rural areas, we have the Rural Housing Fund, under which we give low-cost loan refinance at 6-7% (per annum), depending up on the type of loan.
This is meant for the weaker sections in rural areas, as per the RBI definition. Because of the Rural Housing Fund, a number of HFCs are now entering the rural housing financing space. NHB also holds a 15% stake in Mahindra & Mahindra Financial Services (one of the leading companies in the rural housing finance area).
We are willing to take such equity in more private companies, which are into rural housing and rural housing finance. However, 75% of their financing should be in the rural housing segment. We are also trying to get RRBs (Regional Rural Banks) interested in rural housing. And after several years of initiatives, about 15 RRBs are now in rural housing.
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