Track apps

“SBI will use the analysis to track emerging tensions across all sectors”

Bombay : State Bank of India (SBI), the country’s largest lender, wants to use granular data generated at its branches every day to predict stress and act preemptively to protect its balance sheet. As a result, the public lender is looking for ways to use advanced analytics to sift through the data and find patterns that indicate incipient stress. In an interview, Ashwini Kumar Tewari, Managing Director in charge of Risk, Compliance and Stressed Assets at SBI, explained how the bank has digitized certain stress asset management processes. Edited excerpts:

What kind of stress are you seeing among retail and small business borrowers?

Most of our retail customers are salaried; therefore, we do not see any challenges. Our set of non-employees, although small, is under some stress, but the net number taken as a whole is quite contained. Although the cash flows of the micro, small and medium-sized enterprises (MSME) segment have clearly been impacted, our lending parameters to this segment are very strict. We don’t give them the same loan amount as salaried borrowers, and the loan-to-value ratio is also lower. Even in the salaried segment, people have lost their jobs and had their wages reduced, but since we don’t descend into low credit profiles, our overall experience of covid-19 has not been adverse.

Has technology contributed to the turnaround time in resolving distressed assets?

For single settlement and compromise, we have an open platform where a person can apply online instead of visiting a branch. Internally, we have a dashboard to track this at the operational level as well as at the management level. We are thus able to control the turnaround time and see the quantum of recoveries. The legal team is a major component of the distressed assets vertical. We have an application called Litigation Management System with modules such as National Company Law Tribunal (NCLT), Debt Collection Tribunal and Courts. Here, the entire history is available and reminds, among other things, of the documents to be renewed for the next hearing. We have also digitized the system for managing voluntary defaulters.

What are some of the new technology initiatives your department has planned?

We have so much data in the system. It would be useful to take advantage of this data not only from a risk perspective, but also to see how things are changing in real time in various parts of the country and different sectors. This is an area where we would like to use artificial intelligence and machine learning. Currently, our analytics teams are integrated into the risk, product and operational risk divisions. We get all non-performing asset (NPA) data from across the country, including individual account data, and aggregation happens at the circle level. Suppose there are problems in the steel sector in a particular state; one way to find out is to follow media reports, but does our database show imminent stress in this region? Once he becomes NPA he will need to be treated, but if there are early indicators of stress this can be proactively managed.

Do you think it is faster to resolve troubled loans outside the scope of the Insolvency and Bankruptcy Code (IBC)?

In a few cases where we have realized that getting cash is important and the process itself can be time consuming, it is best to sell to asset reconstruction companies. I think there are some changes being considered in IBC. If they happen, like pre-pack insolvency for businesses, we could handle other cases better. Everyone talks about the highlighted cases, but the smaller cases of 5,000,000 or 10 lakh is not in the media. There are cases of branches in Tier 3 and Tier 4 cities that are recovering very well.

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