The immense, unwieldy State Bank of India is learning to compete. Subir Roy reviews a self-congratulatory book on the bank’s turnaround and its chairman, O P Bhatt
This book recounts what has happened in State Bank of India (SBI) from 2006 to the present when Om Prakash Bhatt has been chairman. Its contention is that a lot did. The period saw a remarkable turnaround in the performance and public perception of the bank. From being a public sector behemoth that was steadily falling behind under the onslaught of new private-sector banks in the post-reform environment, SBI is now back in the reckoning and seeking to equal, if not outdo, the relatively new players in the field. This demolishes the notion that public- and private-sector banks are apples and oranges and it is idle to try and compare the two.
The book first outlines the people initiatives and then the technology and process changes. It lists the thrust areas that have been entered, in order to negate the notion that the public sector is not capable of delivering products like wealth management and personalised services for high-net-worth individuals. This is important because the bank cannot lose the attention of the beneficiaries of the new wealth created in the post-reform high-growth era, today’s trendy, high-spending youngsters.
There is general acknowledgement that a credible attempt has been made to change things in a bank that is so vast and whose sarkari karamchari culture is so entrenched. Soon after taking over, Bhatt went all out to drive home the point that the bank was falling behind and only a culture change would be able to reverse the trend. For this he held a series of conclaves with not just the top brass but managers down to the level of the assistant general managers, who figure exactly halfway up the executive hierarchy.
Even more significant, Bhatt engaged with leaders of the employees’ union and officers’ association in a conclave, at the end of which a remarkable document emerged. It was a plea by unions and senior management alike to all SBI employees to recognise the challenge ahead and face it. This was a unique exercise in the history of the bank and in one stroke secured everyone’s cooperation. Until then, change had been considered very difficult because of entrenched attitudes.
Bhatt also introduced another innovation, seeking to bury the apples-versus-oranges defeatist mindset and equal or better the private-sector banks in both growth and customer satisfaction. For this, 650 of SBI’s 13,000 branches were chosen for their growth potential and given additional resources in terms of infrastructure and skilled staff and asked to forge ahead. This exercise, named the “Super Circle of Excellence”, proved a great success.
The book also records initiatives by the bank in technology and new businesses and pays attention to rural banking, which poses a challenge and offers an opportunity.
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| NONE TOO GOOD | ||||||||
| 2005-06 | 2009-10 | |||||||
| RoA | Net NPA | RoA* | Net NPA* | RoA | Net NPA | RoA* | Net NPA* | |
| Axis Bank (1) | 1.18 | 0.98 | 1.07 | 1.01 | 1.67 | 0.40 | 1.28 | 1.03 |
| Corporation Bank (2) | 1.24 | 0.64 | 0.89 | 1.16 | 1.24 | 0.31 | 1.00 | 0.91 |
| HDFC Bank (1) | 1.38 | 0.44 | 1.07 | 1.01 | 1.53 | 0.31 | 1.28 | 1.03 |
| ICICI Bank (1) | 1.30 | 0.72 | 1.07 | 1.01 | 1.13 | 2.12 | 1.28 | 1.03 |
| Oriental Bank (2) | 1.39 | 0.49 | 0.89 | 1.16 | 0.91 | 0.87 | 1.00 | 0.91 |
| Punjab Nat. Bk (2) | 1.09 | 0.29 | 0.89 | 1.16 | 1.44 | 0.53 | 1.00 | 0.91 |
| SBI (3) | 0.89 | 1.88 | 0.87 | 1.63 | 0.88 | 1.72 | 0.91 | 1.50 |
|
*(group aggregates); RoA: return on assets; Net NPA: Net non-performing assets | ||||||||
Notes: Group aggregates — (1) Private Sector banks; (2) Nationalised banks; (3) SBI and Associates
Source: RBI — A Profile of Banks 2009-10
There is no quarrel with all this, but where the book errs is in creating the impression that all of this happened because of Bhatt and his initiatives. The reality is that Bhatt did a credible job of building on many initiatives undertaken during the tenures of earlier chairmen and has thereby earned a place among those considered better than the rest.
For instance, as early as 1972, SBI, under the leadership of the legendary R K Talwar, initiated the reorganisation that introduced customer segmentation, thus moving away from a setup governed by processes and functions.
In the 1990s the bank went out to expand its global footprint and in the last decade it has sought to pay attention to the neglected area of retail banking.
Again, from the 1990s planned steps were taken to introduce information technology. As a result, today the bank is able to leverage its size through a massive ATM network that provides an incentive to have an account with SBI simply because you can access banking services almost anywhere.
By periodically reinventing itself throughout the last half-century, the bank created a foundation from which it could rise under Bhatt’s leadership.
Stylistically, the book suffers from having been written in a somewhat breathless PR vein, like a cover story in a business magazine in the early days of the genre. It is strewn with abbreviations and a list of their full forms would have helped. Also, there is not a single table that can aid quantitative assessment. As the table above will show, SBI is none too profitable and the quality of its assets none too good compared with its peers. The bank has gained in market share but at a cost. The next chairman has his work cut out for him.
GRIT, GUTS AND GUMPTION
Driving Change in a State-owned Giant
Author: Rajesh Chakrabarti
Publisher: Penguin
Pages: 234
Price: Rs 499
