Tamal Bandyopadhyay: The hunt for the SBI chief

Unlike what happens in private sector banks, SBI is not grooming its people for the top job.

What do Om Prakash Bhatt, Tara Shankar Bhattacharya, Chanda Kochhar and Nachiket Mor have in common? All of them are in contention for the top job in their respective organisations. Bhatt and Bhattacharya are running for the chairman's post in State Bank of India, while Kochhar and Mor will fight it out for the top job at ICICI Bank.

The similarities end here. While Kochhar and Mor will have to wait for a few years until ICICI Bank Managing Director and CEO K V Kamath calls it a day, Bhatt and Bhattacharya's wait will end soon with incumbent Chairman A K Purwar retiring on May 31. Kochchar and Mor have been meticulously groomed for the top job over the past few years but Bhatt and Bhattacharya are there by virtue of being managing directors of the bank. Neither of the two has been groomed for the chairman's job and there could even be a dark horse pipping them to the post at the last minute. This illustrates the classic cultural difference between a government-run bank and a private bank. ICICI Bank's board selects the CEO. In case of State Bank, which is owned by the Reserve Bank of India (RBI), the government selects the chairman in consultation with the Reserve Bank.

The appointment's committee "" consisting of one RBI deputy governor, two bureaucrats from the banking division of the ministry of finance, a former State Bank chairman and one management expert "" will meet next week to pick the right man for the State Bank chairman's post. There will be no interview or group discussions among the prospective candidates. This is a departure from the past. On the past few occasions, the senior executives of the bank went through the drill before the selection of the chairman. So, one thing is crystal clear: the appointing authority is well aware of the potential of the senior executives of the bank and it does not need to take a closer look at them before making up its mind on who would lead the bank after Purwar hangs up his boots.

This is significant if one looks at the background of the appointment. Bhattacharya and Bhatt, two managing directors of the bank, are in contention for the chairman's post as they are the two senior-most executives of the bank. Bhattacharya is senior to Bhatt but he does not have the required two-year residual service. However, this does not automatically disqualify him for the post as there have been cases where the government has chosen to overlook this criterion. His experience as member of the State Bank board (as its MD) can also be counted, if the government decides to try him out.

Bhatt, on the other hand, has been promoted to the MD's post only recently. But one should not read too much into this since there have been cases where a deputy managing director of the State Bank straightway become the chairman. In fact, Purwar himself was the chief of State Bank of Patiala, which is equivalent to a DMD's position in the SBI family, before being made the chairman. Bhatt was selected for the post for which five DMDs were interviewed and one of them is Yogesh Agarwal, present chief of State Bank of Patiala. He happened to be the senior-most of the five DMDs who were interviewed by the appointments committee. This is by virtue of being made the DMD ahead of others although all the contenders joined the bank on the same date "" July 1, 1972.

So, if Bhatt is made the chairman, technically he will supersede some of his senior colleagues. But this will not be a unique case in SBI's history as there have been precedents of supersession. Purwar's predecessor Janakiballabh took over in 2001, superseding three of his senior colleagues. One of them, Vepa Kamesam, was subsequently made a deputy governor of RBI, and another, D P Roy, was made chairman of SBI Caps, the bank's merchant banking subsidiary. The third one, Y R K Radhakrishnan, remained the managing director of the bank.

When it comes to the chairman's appointment, the country's largest bank has a chequered history. Its first chairman, John Mathai, a former finance minister, resigned before completing his term following serious differences with the finance ministry. His managing director, too, followed suit. Until 1969, when R K Talwar was made the chairman, State Bank was run by ICS and IA&AS (Indian Accounts & Audit Services) officers. Talwar was the first insider to be promoted for the top job. But, subsequently, the tradition was broken twice.

In 1985, once again an outsider "" D N Ghosh, an IAS official "" was brought in to run the bank. Central Bank of India Chairman M N Goiporia, too, headed State Bank in the early 1990s but could not complete his term as the bank got involved in the Harshad Mehta scam.

After M S Verma retired, G G Vaidya was the first chairman who had to go through the process of interview and group discussion for the chairman's post. The appointment's board called Janaki Raman and S R Iyer, two more senior executives, for the interview but stuck to the senior most among them, Vaidya. Later Janakiballabh superseded his senior colleagues but Purwar's appointment was smooth without any controversy.

If grooming is too tall a task in public sector culture, the government must follow a transparent appointment process for the top job in country's largest commercial bank which accounts for one-fifth of the banking industry. The government owes this to SBI's millions of customers and investors.