It is not usual for Forbes India to be talking about government-owned enterprises. In general, we believe that private enterprise delivers more innovation and creates more wealth than bureaucratically-run state-owned leviathans. But once in a while, when there is reason to do so, we make exceptions. The arrival of a woman CEO at the top of India’s largest bank, State Bank of India, forced us to take a look at the venerable institution. Fifty-seven-year-old Arundhati Bhattacharya became the first woman head of the bank last October, and ran smack into a downward spiral of falling performance: Rising levels of bad loans, poor returns on equity, a depleting top management pool (4,000 officers are retiring every year), a bloated and underproductive workforce, et al.
To an extent, SBI’s current problems have a lot to do with how the Indian economy is faring. The bank’s operations are a proxy for the economy, and in the past SBI’s rise and fall have closely mirrored those of the economy. This has had two fallouts: If you happen to be chief when the economy is on the upswing, your CV looks good no matter what you do. If you happen to get the top job when fortunes are heading south, your performance looks bad, again no matter what you do. This is the situation in which Bhattacharya finds herself in today.
To her credit, Bhattacharya is not looking at her current challenges with karmic resignation. And she is surely right to believe that if change must come, it has to come bottom-up rather than top-down, for chairmen come and go, but the public sector culture is forever. As she told Forbes India: “We have seen good leaders come and change the image of the bank, but after a while it slides back again. That’s because changes which are driven from the top take very long to stabilise, and none of the people at the top have that kind of time. So now I want to bring change from below.”
It’s not going to be easy when there are 2,22,000 people under your charge. But having identified her priorities correctly, Bhattacharya probably has a better chance of success than anyone else. Forbes India spent a lot of time talking to Bhattacharya and her key executives to understand what’s going on and how she is planning to teach the elephant a few new steps. Like a supertanker that takes a long while to change course, it will take SBI a long time to change. But at least there is a realisation that change is needed. We must give that to her.