As O P Bhatt hangs up his boots after a
five-year innings at the helm of affairs of country's biggest lender
State Bank of India (SBI), he has reasons to feel proud - the bank's net profit rose to its peak at Rs 11,734 crore.
Bhatt's indelible legacy would be his special home loan rates or
teaser rates , which helped SBI dislodge HDFC from its No 1 position in mortgage market, but invited sharp criticism from peers as well as regulator Reserve Bank of India.
While SBI's net profit rose to Rs 11,734 crore in March 2011 from Rs 5,530 crore in March 2006, its market capitalisation stood at Rs 1,17,883 crore as of March 2011 against Rs 47,935 crore in January 2006.
During his five-year tenancy at the corner room on the 18th floor at SBI Bhavan in Mumbai, the assets of the bank more than doubled to Rs 14,51,220 crore (as of March 2010) from Rs 6,96,992 crore in March 2006.
From a non-descript Bhattgaon village in Uttarakhand to the top position in the country's biggest bank, Bhatt's humble journey proves that state-run banks too can churn outstanding leaders. Bhatt proved success is not the prerogative of those with aggression written on their temples and having B-school degrees.
During his stint, loans and deposits grew more than five-fold as he spread the blue and green branding of SBI ATM to remote locations at a time when other state-run banks had a sedate growth and private banks were crippled by the credit crisis.
Today, State Bank Group is the undisputed leader in the banking space with a 25 per cent of the market share. Bhatt had the courage of conviction on his special home loan product to stand up to severe criticism of teaser rates.
He walked with elan on a terrain that has seen many stalwarts falling apart even as he differed time and again with regulator RBI. He even went to the extent of saying that the central bank had not understood his product at all.
Bhatt, in fact, sounded a different note from that of the regulator on a variety of issues - from teaser loans to deregulation of interest rate, on saving accounts to provisioning for bad loans, among others.
Some of the most notable transformative achievements of Bhatt's are the
Rs 20,000-crore rights issue for which he secured all the necessary permission and which will happen in the next quarter. The employee stock purchase scheme that no other PSU bank had ventured into was another key achievement.
Another was the maiden retail bond issue from a bank, which had a whopping 19 times subscription in October 2010, and six times for the second tranche this February.
Another key success was the merger of two SBI's associate banks - State Bank of Saurashtra and State Bank of Indore. Bhatt also went on a massive technology drive, which made the bank a leader in this.
But he has his shares of controversies, too. Discounted home loan rates or teaser rates, launched in response to the global crisis of 2008, being the most important one.
Although, arch rival HDFC (which lost the No 1 position to SBI as the mortgage leader) chief Deepak Parekh was quick to term the special scheme as a gimmick, its humongous success forced rivals to follow suit.
He took on RBI again when he said the central bank has not understood his special home loan scheme.
SBI under his leadership seemed defying RBI on the provisioning front. A critical RBI increased the provisioning five-fold last November, forcing other banks to discontinue.
But Bhatt refused to make any additional provision as he felt that his product was in no way a teaser scheme.
He also differed with RBI on savings bank deregulation, saying this may not be good for the banking system as once it gets deregulated, the customers will have difficulty and PSBs will not be able to continue to engage in the development activities on the back of their lower cost of funds.
Another clash with the regulator was when he guaranteed bonds of Tata Steel worth Rs 4,200 crore - RBI does not allow banks to guarantee corporate bonds. But SBI stood by its client Tata Group, which was unable to raise funds for the Corus Group purchase.
Another row with RBI was when it downgraded SBI by one notch to B- on grounds that it made lower-than-required provisions for bad loans, and made this selectively public.
The rating, which is highly confidential and is not made public, had upset Bhatt, who recently made a case to RBI to review its rating.
Meeting the media on the penultimate day of his five-year innings, he assessed his tenure in a candid manner.
"There has been a positive contagion from whatever progress happened at SBI to other public sector banks. They are all trying to understand and implement the kind of innovations we have done, be it ATMs, branches, marketing."
On why didn't SBI go in for any acquisition though valuations were cheap during the financial crisis, he said.
"It is not that we did not look at any bank. We really didn't find any good fit for SBI. I don't want to buy a bank just for the sake of a large SBI. It wouldn't have served the basic purpose for which the bank was created ... If it doesn't fit our philosophy, we will not buy a bank."
On post-retirement plan, he said, "There are a few people or organisations who are trying to engage me, but I feel it's not proper to do it till I am in the bank. I want to do something where I am happy and also can spend time with my family. Wherever I work, I should be able to contribute in a manner that I am an asset and not a liability," he said.
Bhatt leaves his successor with lots of challenges too, and the main task will be retaining the aggressive brand that Bhatt has created.
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