Khara era ends, Setty has new challenges

With Dinesh Khara's legacy of stock market's love for SBI, his successor CS Setty faces the task of sustaining this momentum while war for deposits continues on the banking turf

- TAMAL BANDYOPADHYAY

The systems and processes at India's largest lender, the State Bank of India (SBI), are so rigid that no chairman can make more than a 10 per cent difference to the bank- either for better or worse.

In statistics, this is known as standard deviation. Whether the boss is a great banker or an average one is, according to popular industry percetion, immaterial.

Dinesh Kumar Khara, the low-profile Delhi School of Economics alumnus, has probably shattered this myth. SBI's net profit over the last four years, between FY21 and FY24, has been ₹1.63 trillion more than the combined profit of the past 64 years (₹1.45 trillion) since its inception. Although the SBI's origin dates back to the first decade of the 19th century with the establishment of the Bank of Calcutta in June 1806, its current avatar was born in July 1955.

Khara took charge on October 7, 2020.

He steps down this week.

Indeed, his predecessor, Rajnish Kumar, laid the groundwork, moving into the corner office, carrying a broom, with a mission to clean up a balance sheet saddled with bad loans.

Immediately after Kumar took over, the bank announced losses for three consecutive quarters, amounting to 15,010 crore — unprecedented in its history.

In cricketing terms, Kumar curated the pitch for Khara to bat on and hit sixes. But let's not forget the whirlwind that Khara had to face while batting Covid-19. He kept his cool, steering the bank through the crisis with patience and skill, and took it to a new level.

Here's just one example of how Captain Cool handled the Covid attack: There was no demand for credit at the time, but the flow of deposits continued.

SBI started doing dollar-rupee swaps converting local currency deposits into dollars and using the resources for overseas operations. Post-Covid, once credit demand began to pick up, the rupee returned to the bank's fold for domestic operations by unwinding the swaps.