Chanda Kochhar: 'This is Back to Banking Basics'

How has the new economic context shaped your strategy?
In the current context, growth necessarily need not be on our balance sheet. There are various aspects of growth. We should use, may be, two to three quarters in a way to consolidate some of the parts of our balance sheet in a manner we will keep them better prepared for the high trajectory of growth that comes back in the environment.

Over time, our proportion of unsecured personal loans has increased substantially. It is time for us to reduce that proportion in the balance sheet.

On the deposit side, in the past, our reliance on wholesale deposits was very high. So again, a big focus to say how do we increase our current and saving account.

How will the cost structure be rationalised?
Reducing our cost structure is the other focus for this year. We are increasing 600 branches, which is a 40 percent increase. So one approach could have been: I should be happy and satisfied with 25-30 percent increase in costs. But I am saying we will implement the branches and keep the cost structure the same. The total employee base that we had last year, we are going to keep that constant, which is big task.

What will it take to reorient the bank?
The challenge is to reshape our own mindset. And at the same time, we need to also reskill and reset our key performance metrics. The other challenge is to equip ourselves to be able to handle it, because the bulky fee income can be centralised but these kinds of things needs to be decentralized and distributed. This is typically back-to- banking basics and this gets done mainly at the branch.

How will the changes be sequenced?
This year, we’ll look at every line item of the P&L and see to improve net interest margin. And to do that, we need to a whole new CASA strategy. Then on the fee income, while I recognise that the bulky fee income this year will be less, we will be develop a more sustainable model of the trade finance transaction.

Then, the third is operating expenses. Fourth is to reduce the loss charges. So if I would do these four things during this year, I would think one would have created a better base on which to grow next year.