State Bank of India talent emerges high-yield asset for pvt sector banks

Regulatory comfort drives bank boards to appoint SBI officials for stability

In the past six months, at least three former State Bank of India (SBI) executives have been appointed managing director and chief executive officer (MD and CEO) of different private sector banks, with Partha Pratim Sengupta being the latest.

Last week, the Reserve Bank of India (RBI) approved Sengupta’s appointment as MD and CEO of Kolkata-based Bandhan Bank. He will take charge in November.

Sengupta was the deputy MD and chief credit officer at SBI. He was later appointed MD and CEO of the public sector lender Indian Overseas Bank. He is widely credited with turning around the Chennai-based lender and taking it out of the prompt corrective action framework. The CEO position fell vacant at Bandhan after founder Chandra Shekhar Ghosh announced a surprise retirement in April this year.

In August, the regulator approved Salee Sukumaran Nair as MD and CEO of Tamilnad Mercantile Bank. Nair’s approval followed the RBI’s rejection of the CEO candidates proposed by the bank board in April. He started his career in 1987 when he joined SBI as a probationary officer and rose to the rank of deputy MD. His last assignment at SBI was as deputy MD and chief credit officer until May 2024, where he was responsible for managing the credit portfolio.

Sanjeev Nautiyal took charge of Ujjivan Small Finance Bank (SFB) on July 1.

A banker with over three decades of experience, Nautiyal was a deputy MD of SBI and also served as MD and CEO of SBI Life Insurance. Nautiyal became the third CEO of the bank in five years, taking charge after his predecessor, Ittira Davis, was relieved before the completion of his term.

Currently, there are six private sector banks in the country where the CEO is from SBI, with Sengupta set to become the seventh once he assumes charge.

Additionally, there are three banks, including one public sector bank (PSB), where a former SBI official serves as a non-executive chairman: Karnataka Bank, Utkarsh SFB, and UCO Bank.

Bankers note that regulatory comfort is the key reason for bank boards to choose SBI officials for top positions.

“The RBI governor has been highlighting the importance of governance and compliance issues in banks, particularly in the private sector. In this context, the regulator seems comfortable with the idea of an SBI official heading banks,” said a senior banker from a private sector bank that is led by a former SBI official.

After the government allowed SBI deputy MDs to become MD and CEO of other PSBs, private sector banks began hiring SBI officers as well. Until a few years ago, several PSBs, such as UCO, Bank of Baroda, and Indian Bank, were headed by SBI officials.

“Appointment of a public sector banker as CEO provides stability to an organisation like Bandhan, which has witnessed exits in the past year,” Macquarie said in a note on Sengupta’s appointment.

The performance of banks headed by former SBI officials has been satisfactory to the regulator so far, according to bankers. For example, Prashant Kumar, a former deputy MD at SBI, was tasked with reconstructing Yes Bank as MD and CEO after it faced financial irregularities. Kumar was able to bring stability to the lender before shifting focus to growth. Similarly, Rakesh Sharma, MD and CEO of IDBI Bank, successfully shifted the focus from corporate loans to retail lending, addressing asset quality issues stemming from corporate credit in the past decade. The RBI approved extensions of tenure for both Kumar and Sharma for three years in 2022.