Arundhati Bhattacharya, the chairperson of State Bank of India retired on October 6. In her last interaction with the media as SBI boss, Bhattacharya opened up on wide ranging issues from the state of economy to dealing with stressed assets, merger of subsidiaries and her post retirement plans.
Being the head of the country's largest lender is a tough job, and even more so when one is hit with two major disruptions back to back. First it was the demonetisation in November 2016 and then switch over to Goods and Services Tax from July 1, 2017. Bhattacharya admits it was indeed a tough time over the past couple of years, but feels, there will be a positive impact that will be seen in the years to come.
“We have been through quite turbulent times... Its been a very interesting, but a difficult journey as well. These times of difficulty we have had, we have used these times well, strengthening internally so as to ensure that going forward, the bank is in a much better position to be a part of the growth story of India,” she said.
Post the demonetisation, lot of resources came into the system which helped banks lower lending rates, said Bhattacharya. The GST implementation too will lead to a further formalisation of the economy, which will also mean there will be less black money, she added.
Apart from the economic disruptions, banks also had to deal with the vexing issue of high non-performing assets. Bhattacharya says the measures now being taken to address the problem (insolvency process initiated against several big NPAs) will have to be given time and reiterated that much of the recognition of stressed assets has already happened and one is now starting to see light at the end of the tunnel.
“Throughout my tenure, I was repeatedly asked whether we are there at the bottom, and I think today we are there and you should see good results coming, going forward,” said Bhattacharya.
The Reserve Bank of India in June had identified 12 accounts each having over Rs 5,000 crore in outstanding loans for immediate referral for resolution under the Insolvency and Bankruptcy Code (IBC). Most of these cases have been admitted in various benches of the National Company Law Tribunal (NCLT). Bhattacharya noted that all these cases were progressing with respect to the timelines. Once the bids would be called, banks will take a call on what is the best bid and then it will be a matter of resolution of the NPAs.
“We are beginning to see light at the end of the tunnel. In respect of other cases as well, call would be taken by December on what needs to be done. We don't expect any delays in timelines there too...This way, a major chunk of NPAs in the system will get resolved,” said Bhattacharya.
She was also confident that one would start seeing an uptick in the economy in the current fiscal itself. But, she admitted that reviving bank credit remained an unfinished agenda.
“Today, while we have done everything to improve our monitoring and mitigation of risk, of improving processes, our credit underwriting standards, our follow up processes, all of that. But, even today the credit growth is not where we want it to be. So, that's an unfinished agenda,” said Bhattacharya.
She will be replaced by Rajnish Kumar, who was the managing director of National Banking Group, from October 7. He has also outlined revival of credit growth and resolution of stressed assets among the top priorities for the bank.
The biggest change ushered in under Bhattacharya's leadership was the merger of SBI's subsidiaries. At least six months before SBI undertook the biggest such exercise till date, she had said it was not a priority. So, was there a pressure to go ahead with the merger?
“There was no pressure at all. I had thought of it (mergers) as well. But, it felt that first the bank itself should get a more solid ground. And, only after we got the bank on solid ground we went for the merger,” said Bhattacharya.
She admitted that the whole process had impacted the bank's growth, particularly in those states where the subsidiary branches had been merged. However, she sees it as “short-term pains” and said the bank was rapidly regaining the lost ground.
Bhattacharya joined SBI in 1977 and became the first woman to lead an India-based Fortune 500 company. What are her plans post retirement?
“I will be around...I will be active, may not be directly in banking, but obviously, I am not just going to hang up my boots...”