State Bank of India Chairman O P Bhatt says the bank did differ with the Reserve Bank of India's views on a host of issues, but it was unfair to blame the country's largest bank for taking care of the interests of the aam aadmi (common man). "My brief went much beyond looking after the interests of a select group of Indians only," said Bhatt, whose five-year term as SBI Chairman ends in March.
He is in Davos to attend the World Economic Forum. Bhatt admitted there were quite a few issues on which he "differed" with the regulator, but that is in the nature of things.
"If you are the largest financial conglomerate in the country, often the regulator may do things that are not appropriate for us, or for the system. It was our responsibility to give feedback. When we give it on a regular basis, sometimes this gets into public domain. But let me add, there were no interpersonal issues here."
When asked how he managed to defy the regulator so often, Bhatt said defiance was too strong a term to use, but hastened to add that had he been wrong, the finance ministry or the regulator would not have allowed him to continue with certain schemes.
"What power does an SBI Chairman enjoy? In any case, I am a simple Gadhwali. No one knew me and I didn't have any political patronage either. So I could easily be removed if I had done anything wrong," an emotional Bhatt said.
On RBI's disapproval of teaser loans (SBI is the only bank to continue with the special home loan scheme till March), Bhatt said he would look at the quarterly data and if the picture was good, he would extend it beyond March. "After that, it is up to my successor."
In strong defence of the scheme, the chairman said the bank had given home loans to nearly 300,000 people in India. "Many Indians own homes because of SBI. I am not fighting with RBI, but only clarifying it. I have not teased anybody, there is no risk and there is no opacity. There has also been no dilution of know-your customer norms or due diligence. We only gave discount on the rate for the first two to three years and the rate is higher than the cost of my funds. So what is wrong in what SBI does?" Bhatt said.
According to him, almost 80 per cent of the home loans given by the bank are below Rs 10 lakh, which means the aam admi. "The NPAs on my loan are still the lowest and I also have the collateral of the customer's house. So what wrong has SBI done?"
He said SBI did what any efficient commercial banker would have done. It used the special home loan scheme for customer acquisition and more business home loan insurance, car loans, personal loans, etc without any risk to the bank.
After the Lehman crisis in December 2008, the bank had a surplus of Rs 1 lakh crore as there was hardly any credit off-take. "If I had to park it with RBI, I would have got 3.5 per cent. We gave loans to common people by reducing the rate of interest to 8 per cent as this was much better for the bank," Bhatt said.
On the differences with the regulator over the 70 per cent provisioning coverage ratio, Bhatt said depending upon the mix of its NPAs, SBI provided for "enough" provisioning on its books.
"If RBI suddenly asks us to hike our provisioning coverage ratio to 70 per cent, it reduces my profits and my share prices take a hit. What is the logic of such a decision? Are you penalising a bank which has low NPAs?" he said. SBI has provided for 54 per cent provisioning coverage ratio against the regulatory prescription of 70 per cent.
Referring to RBI's disapproval of the guarantee given by SBI to bonds issued by Tata Motors for refinancing loans taken for the Jaguar Land Rover acquisition during the slowdown period, Bhatt said it was unwarranted as the bank had to look for new ways to help its valued customers.
In any case, SBI took the decision after asking RBI. It followed all norms and besides helping the company, it also helped the bank earn good commissions. "Since the concept was new, the regulator raised some issues. We went to the government which said SBI didn't do anything wrong. In fact, such guarantees will deepen the corporate bond market," Bhatt said.
POST-RETIREMENT PLANS
On his post-retirement plans, Bhatt said he was yet to decide on his options. "Many people are talking to me. Hopefully, there will be some opportunity to be constructive. There are a lot of people in the private sector who are talking to me. So let's see which way the tide turns," he said.
Pointing out that he brought in "focus" to a bank which needed a new sense of direction when he took over, Bhatt said he tried his best to improve the systems in the bank in terms of technology, marketing strategy, new organisation structure and new businesses. More importantly, he tried to improve the mindset of SBI employees who now have a sense of ownership. "If it continues after I retire, it will be the icing on the cake," he added.
Asked whether his successor will have a tough act to follow, Bhatt said he hoped he had done enough to sort out things that would "make life easier" for his successor.
