Tackling bad debts will be top priority, says new SBI Chairman

Rajnish Kumar has been named as the new Chairman of State Bank of India (SBI). Kumar, who is currently the Managing Director of country's largest public sector lender, started his career in SBI as a Probationary Officer in 1980. According to a new notification issued by the Department of Personnel and Training (DopT), Rajnish Kumar will take over the position for three years starting from October 7, 2017.

Kumar will replace Arundhati Bhattacharya, whose term as the Chairman of country's largest public sector lender ends this week. Kumar has earlier served as the managing director and CEO of the SBI Captial Markets. "Tackling bad debts will be the priority for State Bank of India," the newly named chairman Rajnish Kumar said on Thursday.

"We are already in discussions on how we revive credit growth, how we resolve the (non-performing assets). That discussion, we will try to bring it to a conclusion very quickly. And you will see some changes," Kumar told reporters at SBI's Mumbai headquarters.

A veteran banker regarded by investors and colleagues as an astute operator, Kumar, 59, also put bad loans at the top of his agenda - but said SBI had tackled the debt issues that came as a result of absorbing the smaller lenders. Asset quality would "look much much better" in future, he said.

SBI, which had bad loans of $35 billion, or 12 percent of its loan book at end-June, is due to report quarterly earnings in the coming weeks. SBI accounts for more than a fifth of India's banking assets, saw stressed assets rise after it absorbed five subsidiary banks earlier this year.

Arundhati Bhattacharya was appointed as the first woman chairman of SBI in 2013. She assumed the role of the Chairman at a time when the economy was slowing down, asset quality was deteriorating, resolution of bad assets was moving nowhere and there was no hope of credit offtake because of an over-leveraged corporate sector.

Bhattacharya started by setting six strategic goals - digital, technology, improving delivery standards, cost reduction, NPA reduction and risk management - and ensured the bank made considerable progress on all fronts. Bhattacharya's hands-on approach with digital initiatives, such as mobile apps for retail, SME and corporate customers, was well received. So were her efforts to promote digital-only branches - a one-of-its-kind initiative in the Indian banking industry - and artificial intelligence and robotics for credit analysis, risk management and better customer service. She is positioning the bank as 'the banker to digital India'.

Arundhati Bhattacharya, who is retiring next month, will be remembered for taking some bold steps in a public sector set-up. The first woman to head the largest bank in the country, State Bank of India, or SBI, has seamlessly implemented a number of path-breaking changes, which have become a template for public sector banks, which control more than two-third of the country's banking industry in terms of deposits and advances. Take the merger of five associate banks, a herculean task that went off without major hiccups. The merger has taken SBI to the list of top 50 banks in the world with total assets of Rs 40 lakh crore. The second and third largest banks in the country have assets of Rs 7-8 lakh crore. While critics say the bank is biting off more than it can chew, the success or failure of the merger will be known with certainty only after some years.

Many say there are lot of issues that are still unresolved. One is asset quality, with non-performing assets increasing after the merger of the associate banks. The success of the HR overhaul will depend upon incentives, variable pay and ESOPs, which are a must to retain and encourage talent. Also, a lot will depend on the next chairman, who will not only have to take forward many of the initiatives of Bhattacharya but also match steps with payments banks, small banks and new-generation private sector banks.