Dinesh Kumar Khara has taken charge as the chairman of State Bank of India, replacing Rajnish Kumar, whose tenure ended on Tuesday. In his first interaction with the media since taking charge on Wednesday, Khara outlined his key priorities as the head of the country’s largest lender.
“Safety of our employees, safety of all our customers, and also the quality of our (loan) book, which we have been in a position to maintain till now, that is something I would like to emphasise upon,” he said.
Over the last few years, banks have focused a lot on reducing their non-performing assets. Khara takes charge at a time the country’s economy has been hit hard by the COVID-19 pandemic and it has raised concerns that corporate stress will rise further. However, Khara is not too worried.
“We very closely keep on monitoring the cash flows into our various corporate accounts. That is one broad indicator that is available to us on the health of the accounts. I think, if that is the guide of the health and quality of the assets; I would not say everything is hunky dory, but what ever is seen in terms of stress, is not something, which will be a cause of worry for us,” he said.
Khara noted that business had returned to 70-80 per cent of the pre-COVID times, although there were some concerns in certain sub-segments. Slow credit growth has been an area of concern across the banking industry. Khara expects retail credit growth to do well, but also pointed to the fact that corporates were also raising funds from the capital markets.
“We are witnessing credit growth of 6-7 per cent. I am quite sanguine that our retail credit growth in general is doing well and also, when it comes to corporate credit growth, we have to be mindful of the fact that many of the corporates are not going to the credit market, they are also going to the capital market and for that matter even debt capital market...We will have to readjust to the corporates desire and meet their requirements through credit or investment market; we have got the wherewithal to meet all their requirements,” he said.
Khara said the bank’s current capital adequacy position is fairly comfortable. Last month the bank raised Rs 4,000 crore in additional tier I bonds. Recently, the board has also approved raising additional AT1 bonds up to Rs 5,000 crore.
As the country’s largest bank, SBI is a big player in retail payments space too. The Reserve Bank of India had earlier this year released the framework for establishing umbrella entities for retail payments. Khara mentioned that the lender is seriously evaluating all the options, which are available for the creation of a new umbrella entity in this space.
Khara was the senior-most among the SBI’s four managing directors and the Banks Board Bureau had recommended his name as the next chairman on August 28, based on his overall experience and the performance in the interface with the MDs.
Industry experts gave a thumbs up to Khara’s appointment as the chairman of SBI. Motilal Oswal, the chairman of Motilal Oswal Financial Services feels his appointment will augur well for the bank’s overall functioning and continuation of the business strategy that it has pursued over the past few years.
“While Mr Khara takes charge amidst significant macro uncertainty induced by COVID, we expect SBI to perform relatively well and deliver strong earnings traction under his leadership. This will be enabled by bank’s approach in promptly dealing with stressed accounts and alongside sharply improving the provisioning coverage over past few years,” he said.
Khara has over three and a half decades of experience in all facets of banking such as retail, corporate credit and international banking. As managing director, he was instrumental in successfully executing the merger of SBI with its five associate banks and Bharatiya Mahila Bank, the lender said.
Before being appointed the SBI MD, he had served as the MD and CEO of SBI Funds Management (SBI Mutual Fund). Khara had joined the bank as a probationary officer in 1984.
