Thursday, December 30, 2010

my bank, my career

I have today read the ‘Books of Account’ review on SBI story with the title “Tale of how a behemoth changed trajectory” by Shri D Murali . My sincere appreciation to Mr Murali for a detailed column summarizing the book “GRIT, GUTS and GUMPTION” by Rajesh Chakrabarti.

SBI being a giant PSB, has always played a responsible role since inception even as IBI when RBI was non-existent. The first mandate to SBI was to go rural and it did. Today, the industry has a variety of players in public, old and new private, foreign, cooperative, RRBs and Local Area Banks. And there are NBFCs, Financial Institutions and Micro Finance Institutions too.

SBI should, in fact, be designated as a Maha Nava Ratna Bank for its contributions to the nation, economy and industry for nearly two centuries. But unfortunately, many tend to blame the bank while “Best Banks Surveys” always undervalue SBI. How sad! For example, in a recent survey published by Business Today (Dec 26, 2010) issue, the list of top-10 Best Banks for over seventeen years since 1993 SBI appears only once at no. 10 level in 2002. 

In the early years of economic and financial sector reforms, the list was dominated by foreign banks like BoA, Bank of Tokyo, ABN Amro, Amex, Citi, etc.  No wonder.  Over the years, India's private sector banks and public sector banks also found their place.  By 2009, the top ten list had six PSBs, 2 new Private (Axis and HDFC Bank), 1 old private (Federal) and one foreign bank (Citi) were listed.  Again in 2010, the list is headed by Axis Bank (new private). Some times economies of scale appear to be going against the public sector banks who are burdened with rural banking which is not cost-effective; and size is a hindrance.

New Private Sector Banks and foreign banks are not loaded with old legacies, non-performing assets, not so well qualified or trained staff and so on.  SBI, hence is far above all these factors and a front runner.  RBI looks to its support, experience, exposure and guidance in making many policies (IBI was its predecessor, after all).  Under these conditions, if the bank had transforted into a modern bank of world standards, I compliment the author Mr R Chakrabarti and reviewer Mr Murali of Business Line for their factual story.

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