How did a five-member external jury select the BS Banker of the Year?

The jury picks Shyam Srinivasan for Federal Bank's consistency of performance

It was a jury meeting unlike any other. In normal circumstances the meeting would have been held in an upmarket hotel downtown, but the pandemic restrictions wouldn’t allow that. Instead, five stalwarts of the Indian financial system switched on their computers and tablets from wherever they were and clicked on a video conferencing link at 2 pm on January 19. All the jury members were beaming with joy. India had just won its second Test series in a row in Australia, with the hosts experiencing their first defeat in Brisbane in 32 years.  

The jury had assembled to recognise and reward the best banker in the country in 2019-20. After one and half hours of intense deliberations they chose Shyam Srinivasan of Federal Bank, a silent worker who has been running the Kerala-based bank since 2010, and running it perhaps better than his peers in other banks.  

The five-member jury was chaired by former Reserve Bank of India deputy governor S S Mundra. Other members were former State Bank of India chairman Pratip Chaudhuri; Vice Chairman and CEO of Housing Development Finance Corporation Keki Mistry; Chairman and CEO of Edelweiss Group Rashesh Shah; and Ican Investment Advisors Chairman Anil Singhvi.

Until last year, the deliberations had taken place around a table with reams of Excel sheets in ring binder files. This year, the best minds of the Indian financial system proved their flexibility in adapting to the new normal. They turned out to be quite tech-savvy, shared screens and handled calculations on Excel with ease.   

Rashesh Shah, Chairman and CEO Edelweiss Group & Anil Singhvi, Chairman, Ican Investment Advisors

The mood was light, but the job at hand was far from it.

The pandemic did not disrupt economic activities in 2019-20, except in the last few days. The year was a challenging one. Banks had become risk-averse, there was a credit freeze in the market, numbers nosedived, deposits swelled, while a slowing economy led to a piling up of bad debts. The year was also significant from a corporate governance point of view. One private sector bank had to be rescued, and depositors’ confidence were shaken owing to a scam in a large, multi-state cooperative bank.

Jury members were determined that the reward should go to a banker who had ensured that both depositors and shareholders would retain their faith in India’s banking system, without giving the regulator grounds to complain. 

There were three filters to overcome — to qualify, banks should have an asset size of Rs 50,000 crore and above, there should have been growth in profits prior to provisioning in the past three years, and pre-provisioning growth for the year under consideration should have been over 10 per cent. Only 11 banks qualified in the first round, which was then filtered down to five — one large public sector bank, and the rest from the private sector.  

These five banks were evaluated on both quantitative and qualitative grounds. One unwritten rule the jury followed in this round was whether in recent times the bank and its management had attracted negative headlines.  

“Anybody who improved net non-performing assets (NPAs) and profits year after year is a good pick,” said one jury member. Total assets, profits, cost-to-income ratio, net NPA and market capitalisation were the key parameters in the penultimate round.  

The jury discussed threadbare the financials of these five banks, and by the time the shortlist was down to three, the focus changed to purely qualitative aspects — issues such as leadership, regulatory actions and style of leadership. 

There was some discussion among members on whether Federal Bank should be considered for the top award, since the bank largely operates in the South, and has not expanded pan-India. The touch points of the bank are rather limited, and people may not readily identify with the bank with the way they do with nationalised banks or top private banks. Finally, the jury chair ruled that all banks that got through the cut-offs must have an equal chance.  

Federal Bank’s all-round performance has held steady year after year since Srinivasan took the helm. Over these 10-plus years, Srinivasan has been “low profile and did his job quietly,” observed one jury member. Each member had to choose four banks, and Federal Bank, even though it was smaller than the others, ranked at the top in almost all lists.   

“Consistency of performance is what made the jury vote in favour of Federal Bank. There were a couple of other contenders with equally strong data-sets and decent performance, but the jury noted and recognised that these turnarounds in performance have been of relatively recent origin and of shorter duration, and probably it would be important for the jury to wait and watch  performance for a relatively longer period to establish consistency,” said Mundra.  

Federal Bank had strong ratios, adequate provisioning and low NPA ratios. Although more region-centric than other banks, Srinivasan has made the bank’s brand recognisable over the years, but did not want to grow aggressively and compromising on asset quality or provisioning.  

The bank’s net NPA was 1.31 per cent as on March 31, 2020. Importantly, it has fallen in the past three years, whereas many have witnessed fluctuations. The bank is also one of the few to have reported net profits in the last three years under review. Net profit was Rs 1,543 crore 2019-20, registering 24 per cent growth year-on-year.