SBI chief, three MDs asked to interview for bank’s top job; signs point to Rajnish extension

KOLKATA | MUMBAI: The government has asked State Bank of India chairman Rajnish Kumar to appear for an interview to fill the position that he would be vacating this October, signalling one more term for him.

While it’s unprecedented for a chairman to appear for the same position, it also sends the message that the government prefers tried and tested hands in key positions instead of risking a new leader when the country’s financial system is passing through one of its worst crises in the decade.

The government recently extended the term of Securities & Exchange Board of India chairman Ajay Tyagi. It has also offered an extension to Union Bank of India chief executive Rajkiran Rai, without any formal interview.

The government also risks sending out a wrong signal if the existing chairman doesn’t get another term even after being called for the interview. When a similar situation happened with M Damodaran for the SEBI chief’s post, he had declined to be interviewed.

The SBI interview will be conducted digitally by Banks Board Bureau on August 18 or 19, two people familiar with the matter told ET. Three managing directors – Dinesh Kumar Khara, Arijit Basu and CS Setty — will also be interviewed for the top position at the country’s largest lender. The position of fourth MD is now lying vacant.

SBI did not respond to ET’s mail seeking details on the development.

Kumar’s predecessor Arundhati Bhattacharya had also got extension for little over one year in 2016 when SBI was going through the process of merger of its five associate banks and Bharatiya Mahila Bank into itself. Kumar, now 62, was an MD during that period. The merger came into effect on April 2017.

Kumar’s current term is coming to an end on October 7. He had taken charge at SBI on October 7, 2017, just three months ahead of his scheduled superannuation date. According to statute, chairman or chief executive of a public sector bank can continue in service till 65.

During the second quarter of financial year 2017-18, SBI’s net interest margin, a key profitability parameter was at 2.43% which improved to 3.01% in the first quarter of the current financial year.

SBI’s total loan book grew Rs 22.38 lakh crore from Rs 20.03 lakh over the same period.

“The bank has made considerable efforts over the years to maintain consistency irrespective of leadership changes. The current high PCR (provision coverage ratio) and manageable SMA (special mention account) book indicate a healthy balance sheet,” said Lalitabh Srivastawa, banking analyst at Sharekhan Brokerage.

“If the current SBI chairman gets an extension, we believe markets will take it positively as we are going through an extraordinary times and situation.”