SBI’s Banker For All Seasons

STATE BANK OF INDIA is synonymous with the backbone of Indian banking. What started out as the Bank of Calcutta on June 2, 1806 is currently the country’s largest banking institution, with branches spread from Minicoy Island in Lakshadweep to Tangsey in Ladakh, along with numerous branches operating overseas.

The legacy and deep network make the role of SBI chairman both lucrative and stressful. Growing a behemoth like SBI is a task in itself because of its scale of operations. The bank’s current loan book is around ₹32 lakh crore (it grew 16% in FY23), almost one-fourth of the cumulative loan book of the banking sector (₹135 lakh crore at the end of FY23).

MD and CEO Dinesh Khara is a career banker who started out as a probationary officer at SBI in 1984. Since then he has moved up the ladder and held many key positions within the bank and its subsidiaries.

In November 2013, the then SBI chairman Arundhati Bhattacharya nominated Khara as MD and CEO of SBI Mutual Fund. Within three years under Khara’s leadership the company emerged as the largest exchange-traded fund manager in the country.

With a focus on digital, the bank also introduced online investing during Khara’s tenure to enable customer acquisition and improve operational efficiency. Around 63% savings and 35% retail accounts were added digitally last fiscal. The YONO app launched in 2017 enabled UPI payments for customers of other banks, which helped SBI lower the cost of marketing and customer acquisition. The bank underwrote ₹1 lakh crore of loans on YONO in FY23. It currently has over six crore registered YONO users, while one crore log onto the app daily. Khara is banking on YONO to bring down the SBI’s cost-to-income ratio. It has recently launched YONO 2, with a target to increase the number of registered users to 30 crore.

Khara has been MD of SBI’s corporate banking and subsidiaries and has headed functions, including risk, mergers, IT, and compliance. His experience gives him the ability to delve into the nitty-gritty of a problem and deploy the perspective of a bird’s-eye view.

The Indian banking sector is closely connected with the broader economy. As banks of advanced economies such as the U.S., Britain and Switzerland struggled due to the global slowdown in FY23, Indian banks showed tremendous resilience.

Under Khara, SBI improved its total income, operating profit, net profit, net interest income, net interest margin, deposits, CASA ratio and capital adequacy ratio, among others. The country’s largest lender reported a net profit of ₹55,648 crore in FY23, a 57.31% growth year-on-year, on the back of a robust jump in interest income. Net interest income (NII) grew 20% YoY to ₹1.45 lakh crore, while the lender’s net interest margin saw a 22 basis point improvement to 3.58%, from 3.36%. Total income also moved up from ₹3.16 lakh crore in FY22 to ₹3.69 lakh crore in FY23. Operating profit rose 11% YoY to ₹83,713 crore.

The government-run bank recorded significant improvement in asset quality as well. SBI’s gross non-performing assets (NPAs) declined to ₹90,027 crore in FY23 from ₹1.12 lakh crore in the previous fiscal, while gross NPA ratio fell from 3.97% in Q4 FY22 to 2.78% in Q4 FY23, the lowest in 10 years. Aiding the bottomline was a decline in provisions to ₹9,144 crore (FY23), from ₹14,087 crore in FY22.

Khara believes the government’s commitment to infrastructure development, the implementation of Production-linked Incentive (PLI) schemes, and ambitious strides in renewable energy, particularly battery storage facilities and green hydrogen initiatives, are catalysing a robust resurgence in the credit cycle. As the banking sector leverages these opportunities, SBI is positioning itself for sustained growth.