Bhattacharya, in her final media interaction with the media as bank chairman, speaks candidly on all the pain points that SBI and industry faced during her tenure. She is confident that SBI and the industry's NPA levels will start to improve in the coming quarters
SBI chief Arundhati Bhattacharya
Image: Vikas Khot
Arundhati Bhattacharya, the outgoing chairman of India’s largest public sector lender, State Bank of India, on Friday backed the “big reforms” – particularly demonetisation and the introduction of Goods and Services Tax (GST) – which the Narendra Modi government has introduced in the last one year.
“Every big reform takes time to execute. One must give the government time to execute its plans. I am confident that the benefits will play out over time. Usually everybody is resistant to change, that is why people are talking more about it,” Bhattacharya told a media gathering on the last day of her tenure as SBI chairman.
Rajnish Kumar, an SBI veteran, who has worked with the bank since 1980, will succeed Bhattacharya and take charge on October 7 (Saturday). Kumar gets a three-year term as chairman and managing director (CMD).
The government has, in recent months, been blamed for the slowdown in India’s pace of growth, as the trading community and unorganised sector are still grappling with the changes coming in through the new tax.
GDP for the April to June 2017 quarter came down to 5.7 percent, from 6.1 percent in the previous quarter. Growth has continued to slow for the past six successive quarters. The domestic economy grew by 7.1 percent in the twelve months to March 2017.
Consumer price index (CPI)-based inflation has started to rise [it jumped to 3.4 percent in August from 2.36 percent in July], fueled by higher food prices, the impact of GST, and erratic rainfall and its expected impact on crop output.
Factors such as the still-sluggish creation of new jobs (which will have an impact on consumption), a weakening rupee against the dollar and rising oil prices, are starting to emerge as real concerns for the economy which, for several months, had a safety net thanks to low global crude prices that helped India lower its fiscal deficit.
Bhattacharya led the bank during one of its toughest periods, when – like several other public sector banks – it was impacted by rising non-performing assets and a business environment in which it became difficult to lend towards infrastructure projects.
Kumar has said he will prepare a “blueprint” for the next three years which will include targets relating to asset quality and credit growth. Kumar will also look to take steps which would help revive credit growth.
Bhattacharya backed her successor saying that these “were two of the most important areas which needed attention.”
Bhattacharya was also confident that the NPA levels for the banking sector as a whole would definitely come down in coming quarters. “I can say we are at the bottom. Much of the pain has taken place,” she said. The gross NPAs of the merged SBI entity stood at 9.97 percent of gross advances during the April to June 2017 quarter, indicating the battle against bad loans is far from over.
Bhattacharya’s term will be noted for bringing about a digital transformation, both in terms of technological processes and tie ups with several digital companies.
One of the other key features of her term was the mega merger of the SBI and five of its erstwhile associate banks and the Bharatiya Mahila Bank (BMB) with itself. The jury is still out on whether the merger has been a benefit or a pain point for the bank’s customers. “I have got mixed feelings in my feedback. I have heard, in some cases, that customers have moved out [to other banks], while some have said that we have gained more customers.” She explained that her initial fears relating to execution of the merger were about “wanting to ensure that the bank [SBI] was on solid ground first before undertaking the merger".
Bhattacharya said that, post retirement, she did not “plan to remain in the banking industry.” However, she did not disclose what she had really planned to do, going ahead.