Steering State Bank of India (SBI) through the ongoing pandemic – which is taking a heavy toll on lives, livelihood and the economy – will be the biggest challenge for Dinesh Kumar Khara, taking over from Rajnish Kumar as the chief of India’s largest bank.

Khara’s name was recommended by the Banks Board Bureau to take up the top position at SBI. The Centre has approved Khara's appointment as Chairman of SBI for a period of three years, with effect from Oct 7.

Khara will have to “cross the river by feeling the stones” as the road ahead is fraught with uncertainties brought on by the ripple impact of the pandemic. The challenges that the country’s top bankers currently face include the contraction (of 23.9 per cent) in first quarter GDP ( which is expected to remain in contraction mode in FY21); a tepid credit growth; loan recoveries almost coming to a grinding halt; and overseeing the sanction and implementation of one-time restructuring of Covid-related stressed advances; among others.

Khara, who joined SBI as a Probationary Officer in 1984, will have to roll up his sleeves to take on the aforementioned challenges.

SBI insiders say the genial Khara will be up to the task as he knows the bank like the back of his hand. “When he takes a decision he will also tell you the reason behind it,” said a senior SBI official.

Newly-created vertical

Besides the aforementioned challenges, Khara will need to stabilise the operations of the newly-created Financial Inclusion and Micro Market (FI&MM) vertical. This vertical has been set up to counter the rising threat to the bank’s business in rural and semi-urban areas, expand and leverage the vast customer service point network, increase focus on the FI business and reconnect with the rural economy.

He will have to ensure that the proposed ‘Second Innings Tap – Voluntary Retirement Scheme – 2020’ will be kept open for three months from December 1 to February-end every year to optimise human resources and costs go off without a hitch.

Khara may initiate the exercise to list subsidiaries such as SBI General Insurance Company Ltd and SBI Funds Management Pvt Ltd (the Asset Management Company of SBI Mutual Fund) to unlock value.

The bank is also working on hiving off its digital platform You Only Need One (Yono) App into a separate subsidiary. This comes at a time when digitalisation of banking transactions is increasing by leaps and bounds.

Under Rajnish Kumar’s leadership, SBI’s advances grew by ₹4,93,199 crore (between September-end 2017 till June-end 2020) to ₹23,85,639 crore and deposits were up ₹7,96,183 crore to ₹34,19,363 crore.

Gross NPAs

Further, gross non-performing assets (GNPAs) declined from 9.83 per cent of gross advances as of September-end 2017 to 5.44 per cent as of June-end 2020. The provision coverage ratio improved substantially from 65.10 per cent in the second quarter of FY18 to 86.32 per cent.

Kumar worked towards building a relatively stronger bank during his three-year tenure. Now, it is the turn of Khara and his team to do the same.

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