SBI listed its life insurance division last year, and the earnings were useful in overcoming asset quality issues. It also intends to sell a portion of its shareholding in SBI Cards. Rajnish Kumar, the chairman of SBI, stated on Tuesday that the SBI general insurance‘s listing could take an additional three years.
Speaking at the India Economic Conclave hosted by Times Network in this city, Kumar stated that the bank will float its asset management company before SBI General Insurance.
SBI listed its life insurance division last year, and the earnings were useful in overcoming asset quality issues. Additionally, it intends to sell a portion of its investment in SBI Cards.
SBI General Insurance, which is a joint venture with Insurance Australia Group, has to “mature” and will await the valuation to touch Rs 50,000 crore, Kumar said.
“We’re talking, but if you want my opinion in order, I’d say AMC first, followed by SBI General. We still think that SBI General won’t be fully developed for another two to three years,” the man added.
Regarding the asset quality situation, Kumar reiterated that non-performing assets reached a peak in the previous quarter and that things will start to improve this quarter.
Regarding the bank’s exposure to the telecom industry, Kumar claimed that it had previously burned its “fingers and body” but now appeared more optimistic about the industry.
He said that the bank is in a position to withstand future setbacks, if any, and that the risk is “lot less” currently.
The bank is not getting much of demand for large projects given the state of the economy and the project loans are much smaller now, Kumar said.
In the midst of an extended period of liquidity surplus, he said that raising equity capital was more challenging than finding money to pay for corporate debt obligations.
Due to a variety of issues, including the general economic situation and the poor investor trust resulting from failures like losing money in the past, companies are having trouble raising equity.
When it comes to the consolidation of state-owned banks, Kumar claimed he does not anticipate any “major changes.”
He did, however, imply that, in contrast to competitors in the private sector, state ownership of lenders restricts management’s ability to make independent commercial decisions.
“As a private bank, you still have a choice in who you choose as a client. In SBI, you don’t have that choice at times, even if business is not generating profits,” he said.
The SBI CEO acknowledged that the company had not met its obligations to equity investors, but he demanded that the bank be assessed according to the “stakeholder value” it is creating.
According to Kumar, a “small segment” that makes up less than 10% of the balance sheet suppresses stock prices and lowers performance.
He said it’s important to include broader “stakeholder returns” that more people throughout the world are watching, rather than just returns for stock investors as measured by share price growth.
In addition to advising SBI’s peers to follow suit, Kumar stated that SBI does not require any capital from the government and will rely on internal accruals and profits for its buffers.
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