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C O N T E N T S Down
but not out Red
alert A
vote for the future Round
Table Dial
‘R’ for restraint Overcoming
obstacles Database |
Q&A
Our Jury, which chose the Banker of the Year, said they are voting for the future even though SBI’s numbers aren’t that impressive. When you took over as Chairman in July last year, you had said one of your priorities was to reverse the bank’s slipping market share. What’s the progress? I am delighted with the Jury’s remarks that they are voting for the future. That’s saying a lot for a bank which is 200 years old. In the last 18 months, I have been trying to position the bank as a national champion for Indian industry and all other sections of society. The positioning I have in mind is similar to what ICBC has achieved for Chinese companies and people. On market share, we have been fairly successful— it was slipping till September 2006 but we have been able to reverse it. Till October this year, our market share in deposits has gone up by 61 basis points and advances by 11 basis points. That’s a substantial increase.But I can’t throw profitability to the winds for market share; that’s not what banking should be. But your numbers still don’t reflect the growth that you are claiming. Our financial numbers for 2006-07 may not reflect the progress we have made but the point is that 75 per cent of our profit in the previous year was because of one-off items. So, from this context, our performance in 2006-07 was three times better than that in the previous year. Are you worried about 2009 when foreign banks are expected to get more freedom? We are fighting back even within the constraints. The government has also bought into the transformation of SBI by putting in Rs 10,000 crore via the rights issue. But my feeling is the Indian banking industry isn’t doing much in the run-up to 2009; the buzz is missing. But SBI is doing a lot. Our balance sheet should grow to $ 250 billion in two years from $150 billion now. We are also bringing in huge structural changes. For example, our MD is also the Chief Credit & Risk Officer. This is a model followed by the best banks. The role of the CC&RO won’t be day-to-day loan disbursals, but to align our risk management systems with global benchmarks. When such a crucial function is headed by the MD of the bank, the job profile gets the importance it deserves. But SBI needs to scale up its size to fund mega acquisitions of companies. True. Indian companies have ambitious plans for acquisitions and we need to be big. We have started the process of merging our associate banks, which together form the second-largest bank. So, the second largest bank will merge with the largest bank. This will take up to two years.We are also not averse to acquiring banks in India or abroad. It’s not necessary to buy a big foreign bank. A substantial stake which gives us a say in policy decisions should be fine. We need to be able to raise resources, if we are to remain the number one provider of M&A financing. A foreign acquisition will help and there are opportunities because the US seems to have become the biggest ‘emerging market’ in the world after the sub-prime crisis. Many financial sector entities there have seen their valuations dip by over 40 per cent. But we have to be careful. How did you manage the SBI bureaucracy to clear the part-financing of the Tata group’s acquisition of Corus in just an hour?
Business Standard • December 2007 |
SBI
Chairman O P Bhatt speaks to Shyamal Majumdar
on how he plans to grow the bank’s balance sheet to $250 billion,
in two years, from $150 billion now.