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EDITORIAL

Down but not out
The poor offtake of retail loans has pulled down credit growth

Red alert
After a sharp reduction in the last three years, NPAs are creeping back into banks’ balance sheets

Making the elephant dance
Interview with SBI Chairman O P Bhatt on his efforts at re-energising the bank

Round Table
Seven top bankers discuss “2009: Are banks in India ready for it?”

Dial ‘R’ for restraint
Cases of coercion and violence are forcing banks to soften their approach towards debt recovery

Overcoming obstacles
RBI has softened its stand on co-operative banks, but the guidelines are still strict

Database
All the data you wanted on banks

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A vote for the future

A distinguished jury picks State Bank of India Chairman O P Bhatt as the BUSINESS STANDARD BANKER OF THE YEAR

Fighting off some stiff competition, State Bank of India Chairman O P Bhatt has bagged the BS Banker of the Year award for 2006-07. Chaired by R Ravimohan, managing director and region head, South Asia of Standard & Poor’s, a jury comprising Pravin Kadle, managing director, Tata Capital, Anil Singhvi, managing director ICAN Advisors, and Ashvin Parekh, head of financial practices, Ernst & Young, concluded that Bhatt deserved the title for the initiatives he has taken to position the country’s largest bank to compete with private bank challengers which operate with much more operational freedom. Citibank’s Sanjay Nayar and HDFC Bank’s Aditya Puri were close competitors but Bhatt’s promise of transforming SBI into India’s bank of the future tipped the scales in his favour. ICICI Bank and Axis Bank were not considered as K V Kamath won the award last year and P J Nayak in the previous year.

ASHVIN PAREKH Head of Financial Practices, Ernst & Young In SBI, the leadership has to make the elephant dance

Even though SBI was not at the top in any of the financial parameters considered, the vote was one for the future with the bank under Bhatt’s stewardship considered best positioned to make a difference to all the stakeholders. Here’s a synopsis of the views expressed by jury members during the course of the discussion.

R RAVIMOHAN: We put different weightages to parameters such as size, return on assets, net interest margin, capitalisation, asset quality etc. To obtain the dynamics, we put 20 per cent weightage to size and 5 per cent to margin. In another extreme, we put more weight to margin and less to size. What was interesting was that in almost all the permutations and combinations, HDFC Bank kept coming up in the first two-three spots and SBI in the last 10. But Ashvin thinks SBI is the best qualitatively.

ASHVIN PAREKH: Normally we find two sets of initiatives – strategy and vision. Whatever name it is given, it will account for 30-40 per cent of the impact. You got to have a leader who is going to take care of the core aspects of banking and, in a huge organisation like SBI, the leadership has to make the elephant dance. I thought Bhatt had to undo a lot of things of the past.

We evaluated the performance of SBI where we ascribed 25 per cent weight to growth, 30 per cent to profitability, 40 per cent to efficiency, and 5 per cent to liquidity (including capital adequacy). The result was that SBI was the 10th best, but HDFC was surprisingly 11th best. Last year, SBI performed well. The second is the whole issue of subsidiaries. This leadership is handling it in a far more matured manner.

PRAVIN KADLE: What we have found is that SBI had earlier never really used its branch network. Now they are really using it aggressively. They have started in the right direction.

ANIL SINGHVI: I support Ashvin as SBI is now perhaps looking at transforming into a bank to reckon with. Earlier it was a me-too kind of thing. In the last 12 months if they have done enough work and the fruits of that are coming now, then Bhatt should qualify for consideration.

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Business Standard • December 2007