The Importance Of Being Arundhati Bhattacharya

On 1 October, State Bank of India (SBI) chief Arundhati Bhattacharya’s tenure was extended by one more year, the announcement coming five days ahead of the end of her three-year term.

It was not entirely unexpected, as SBI is in the process of merging five associate banks with itself as well as the Bharatiya Mahila Bank—launched in 2013 exclusively for economic empowerment of women—and Bhattacharya is probably the most competent person to complete the task. But few would have seen it coming almost a week ahead of her last day in office.

The government is not known for speed when it comes to the appointment of SBI boss. Her predecessor, Pratip Chaudhuri, had to wait for a week even as a managing director (R. Sridharan) was asked to hold the additional charge of chairman. Chaudhuri’s predecessor, O.P. Bhatt, waited for one month to move into the corner room with a managing director (T.S. Bhattacharya) overseeing the state-run bank’s operations (not as interim chairman though).

The current SBI chief surprised us on many counts.

In SBI’s 211-year history, Bhattacharya is the first woman boss. Hers is also the first instance of an SBI chief getting an extension after the age of 60.

She had a fixed three-year term as chairman, exceeding the retirement age (60) but this is not the first such instance in SBI. Bureaucrat D.N. Ghosh was given a four-year term in the second half of 1980s, exceeding the retirement age.

Similarly, getting an extended term also is not entirely new. R.K. Talwar, the youngest and one of the most efficient chairmen SBI has ever had, got a two-year extension after a three-year term. In her move to the top, she superseded three senior colleagues, but again, that’s not new.

She calls herself chairman of the bank—not chairperson—but one doesn’t need to read too much into it. On assuming office, she printed her business cards as chairperson but the bank’s legal department advised her against it as the SBI Act does not have any provision for a chairperson.

When she joined the bank as a probationary officer in 1977, less than 20% of the new officers were women. The figure has doubled now but the percentage is still lower than many of SBI’s private sector peers—among officers, it’s about 17% and among all employees, about 23%.

She is not fatigued even after spending four decades in SBI as she does not treat her career as one job in one bank but a dozen jobs with different challenges—ranging from working at the foreign exchange wing in Kolkata to a stint in the US and retail banking, corporate banking, treasury, new business, human resources, investment banking in Mumbai and, finally, the assignment of the bank’s chief financial officer before moving to the corner room.

How has been her report card as chairman? Since she took over in October 2013, it will be fair to look at the bank’s financials in the September 2013 quarter and the June 2016 quarter (SBI is yet to announce its September 2016 earnings).

Let’s focus on two key parameters: business and bad loans over the last three years, and compare SBI with its peers—two each in public and private sectors—Bank of Baroda (BoB), Punjab National Bank (PNB), HDFC Bank Ltd and ICICI Bank Ltd.

The growth in SBI’s deposits during this period has been 38% and loans 33%—lower than HDFC Bank, broadly on the lines of PNB and ICICI Bank, and much higher than BoB.

On the bad loans front, SBI has done better than all others, including HDFC Bank if we consider the rise of such loans in absolute terms. For instance, SBI’s gross bad loans during this period rose by 58% to Rs1.02 trillion, against a rise of 67% in HDFC Bank, 171% in ICICI Bank, 243% in PNB and 295% in BoB.

Similarly, after setting aside money, its net bad loans rose 79% to Rs57,421 crore against HDFC Bank’s 88%, BoB’s 229%, PNB’s 272% and ICICI Bank’s 458%. Its gross bad loans as a percentage of total loans rose 1.3 percentage points during this period to 6.94% and net bad loans, by 1.14 percentage points to 4.05%, higher than HDFC Bank but lower than the other three.

During this period, the SBI stock rose around 58%, as much as BoB, more than PNB but almost half the rise of HDFC Bank. ICICI Bank stock has lost close to 18%.

Bhattacharya focussed on three key areas—managing bad loans, raising productivity and leveraging IT to do things smartly. Despite its much larger size, SBI is more nimble-footed than most of its peers on the digital space and probably the most aggressive bank in using social media.

Bhattacharya’s colleagues like her flexibility in approach to business. An example of that is junking the agreement signed with Gujarat’s Adani Group to build a $7.8 billion coal mine in Australia when she found that it would not be viable—a project announced with much fanfare in Brisbane where Adani Group boss Gautam Adani was accompanying a business delegation for the Group of 20 summit, attended by Prime Minister Narendra Modi.

She is articulate but not flamboyant. She has strong views on many things which she expresses in closed door meetings with the banking regulator and the finance ministry but, unlike her two immediate predecessors, Chaudhuri and Bhatt, she doesn’t fight openly with the regulator.

Her colleagues say her biggest strength is that she doesn’t believe in living in a denial mode amid harsh business realities.

After she took over as boss, every Saturday afternoon, she would hold a meeting on bad loan resolution. At these meetings, which at times stretched till late evening, accountability would be fixed and the executives concerned would need to get back with resolution plans in a week.

She is also a multi-tasker, and has an eye for micro details but doesn’t miss the macro story.

None of these attributes may be entirely new for a person who runs the nation’s largest lender but what distinguishes Bhattacharya from others is that she also carries her people along with her, something which many of her predecessors could not do.

Tamal Bandyopadhyay, a consulting editor at Mint, is adviser to Bandhan Bank. He is also the author of A Bank for the Buck, Sahara: The Untold Story,and Bandhan: The Making of a Bank.

His Twitter handle is @tamalbandyo

Comments are welcome at [email protected].

This column first appeared in www.lilvemint.com