A day after the bank announced its worst quarterly results in over a decade, it was business as usual for Chaudhuri.

Investors, however, continue to fret. The SBI stock lost another 2.5 per cent. In two trading sessions, the bank's stock price has declined by over 10 per cent. Reactions from insiders have been mixed.

The unexpected rise in provisioning and the drop in profits surprised many, with some saying it made sense to take the challenges head on, instead of deferring them.

Bank officials said the top management was taken into confidence about the bank's provisioning plans a significant departure from the earlier O P Bhatt's regime, which was more of a one-man show.

However, as chairman, Chaudhuri made sure the buck stopped with him.

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A senior official working with the bank's corporate office said, "The sharp drop in the net profit for the fourth quarter was almost on a par with that of a small bank. It has certainly hit our image."

SBI sources said the other reason to clean up the balance sheet was to avoid any embarrassment at a later stage, when stressed assets would be thrown up by technology. The finance ministry had mandated banks to classify non-performing assets (NPAs) by using technology, without human intervention.

This mandate, which was scheduled to be implemented by banks by March-end, was extended till the end of September.

"We have realised NPAs can throw up nasty surprises once they are identified through technology. So, it is better to start cleaning the system as early as possible," said an SBI executive.

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SBI had increased loan loss provisions by 50 per cent and made additional provisions towards teaser loans of Rs 500 crore (Rs 5 billion) provisioning which was to be made in the third quarter but was deferred by the previous management.

Scaling up provisions, even at the cost of the bank's bottom line, was a tough decision, said banking industry insiders.

"Slippages were higher for the quarter at 3.1 per cent - higher mainly due to slippages from the small and medium enterprises and the agriculture portfolios. The bank indicated slippages from these two portfolios were driven by a transition to system-based non-performing loans," said Kotak Securities in a research report.

The exercise to clean up the balance sheet would continue in the current quarter too, since the SBI management had also indicated provisions of at least Rs 2,000 crore (Rs 20 billion) in this quarter.

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Another key issue was the burden of pension provisions. "The pension provisions (of SBI) may have been underreported earlier, as the figure Rs 11,707 crore (Rs 117.07 billion) came as a surprise.

It seems when salaries were raised by 17.5 per cent, the exact burden from pension liability was not worked out," said Suresh Ganapathy, head, financial research, Macquarie.

"In addition, NPAs were also underreported to some extent, as slippages have gone up more than what was expected," he added.

SBI insiders said the previous management had reversed a few strategies, and these had failed to introduce the desired results.

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This management is quick to address those. As a result, SBI would go back to strengthening it mid-management positions to increase efficiency.

"We had a system of module, which consisted of 40-50 branches. All branch heads used to report to a deputy general manager level officer. The previous management dismantled the practice, which increased the pressure on the general managers. As a result, the monitoring system was hampered," said the bank executive, adding the bank would soon resort to the original practice.

Analysts are not completely re-rating the stock, but are busy revising the stock price target.

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Foreign brokerage Morgan Stanley, which has an underweight rating on SBI, slashed its price target on the bank's shares to Rs 2,000 from Rs 2,450 earlier.

"At our (current) price target the stock would trade at 8.1 times 2011-12 estimated earnings per share and 1.3 times the core book. If the macro situation does not improve, the stock could trend towards our bear case value of Rs 1,500," Morgan Stanley analysts said in a note to clients.

Other brokerages that have reduced their price target on SBI shares after the results include Macquarie, MF Global, Kotak Institutional Equities and Anand Rathi Financial Services.