MUMBAI: Challa Sreenivasulu Setty assumes the corner office of the nation’s largest lender at a time when the bank is in the pink of its health, as his predecessor Dinesh Khara is leaving a very strong balance sheet with best asset quality and much larger retail franchise. Setty’s rise to the pole position at the nation’s largest bank—his appointment as the 27th chairman of the State Bank was cleared by the Cabinet Committee on Appointments last night–is a typical example of how hard work and dedication, and not pedigree, can take one to the peak of one’s career and life. Setty was born as the son of a rural financier in the undivided Andhra Pradesh on 26 September 1965, in the Peddapothulapadu village of the Jogulamba Gadwal district of the present-day Telangana.His humble roots become clearer when one comes to know that he had his entire schooling in Telugu medium government schools. Later on, Setty did a bachelor’s in agriculture from the Acharya NG Ranga Agricultural University. He is also a certified associate of the Indian Institute of Bankers.Setty will assume office on August 28 for a three-year term, the day Khara will superannuate after helming the bank since October 7, 2020, including a ten-month extension from last October.Before being appointed chairman, Setty was the senior most of the four managing directors of the bank looking after international banking, global markets and technology verticals after beginning as a probationary officer in 1988. He was first appointed at the Baroda branch. Over his more than three decades-long career,Setty has gained experience in corporate, retail, digital, and international banking.Setty’s name was cleared by the Financial Services Institutions Bureau on June 29, 2024, after interviewing the other two MDs– Ashwini Kumar Tewari and Vinay M Tonse.“Setty is a storehouse of knowledge and an excellent leader who will definitely take SBI to greater heights. It is a treat working with him,” a former long-time colleague said.A private sector banker said Setty is the right choice for the top job at SBI as he is very knowledgeable and meticulous. “I always thought he was the most competent and fit candidate for this position.””You will see him frequently asking customers — especially retail — about service experience, pain points, areas of improvement and suggestions,” a senior SBI executive working in retail operations said. He added that Setty is known for speaking his mind, but does it politely and respectfully.The outgoing chairman Khara is leaving a strong balance sheet for his successor. Under his leadership, SBI was an outlier even during the bad times, when other lenders struggled with asset quality and growth issues.At Khara’s last earnings press conference, Saloni Narayan, his chief financial officer said that his term as chairman saw the 69-year-old bank earning much more than what it earned in the previous 65-plus years.“The bank has earned Rs 1.63 trillion in cumulative net profit under the chairmanship of Khara as Rs 1.45 trillion the bank cumulatively earned in the previous 65 years,” she said. Most of this was booked in FY24 when it had logged in a hefty Rs 61,077 crore in standalone income, making it the biggest annual profit.But Khara, has given an indirect target to Setty, when he told reporters last Saturday that his own target was to rake in Rs 1 trillion in annual profit for the bank.Khara’s term also saw the bank thrice toppling Reliance Industries as the most profitable company in Q3 and Q4 of FY24 and also in Q1 of FY25 with a standalone net income of Rs 17,035 crore, which is much bigger than Reliance.From an asset quality side, Khara has ensured that the bank is in the pink of its health with the lowest gross non-performing assets ratio of 2.24 in a decade, as against 2.78 last year, while its net NPA ratio printed in at 0.57 compared to 0.67 per cent. The same improved by 55 bps and 15 bps, respectively, in the June 2024 quarter.But this does not mean Setty has an expressway ahead. Under a watchful regulator, no banker can have a smooth rise. The recent RBI crackdown on banks and no-banks on the technology front as well as its continuous goading on governance issues are tough tasks that will take quality time out not only for Setty and SBI but for the whole banking industry.Other regulatory challenges include the proposed changes in the provisioning norms for infra loans coupled with the new LCR framework which will be in place from next April.On the assets side, after a good run for nearly two years, the system is facing rising delinquencies in consumer loans, especially in sectors like education loans, credit cards and agri loans and SBI being the leader in all these segments, Setty needs to have his sensors up across all directions.Often referred to as the elephant among domestic banks for its sheer size (it controls over 23 per cent of the system-wide assets and liabilities), even for the most astute banker, handling SBI, which has total assets of over Rs 81 trillion as of June 2024, which is more than the combined balance sheets of both HDFC Bank and ICICI Bank, won’t be an easy task.
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