A man who nurses banks back to health

After a gap of nearly a year, the Reserve Bank of India’s top deck is complete, following the appointment of IDBI Bank MD & CEO Mahesh Kumar Jain as the fourth Deputy Governor by the government.

The fourth Deputy Governor’s position fell vacant after SS Mundra demitted office on July 30, 2017.

The long-awaited appointment comes at a time when the banking sector is reeling under bad loans and heavy provisioning burden, and conservatism has set in among public sector bankers when it comes to lending. Further, more than half of the public sector banks (PSBs) are under the prompt corrective action (PCA) framework, whereby their lending and expansion activities are curtailed due to high non-performing assets and negative return on assets (ROAs).

Fifty seven-year-old Jain is known as a turnaround banker, who successfully steered Chennai-headquartered Indian Bank into profitability when he was at the helm from November 2015 till March 2017. In March 2017, the government moved him to IDBI Bank, expecting him to repeat the Indian Bank magic.

At IDBI Bank, which is up against a mountain of bad loans, Jain started in right earnest, crafting a comprehensive turnaround strategy in May 2017, entailing aggressive recovery, churning the corporate loan portfolio to lower-risk-weighted assets, increasing retail lending, reducing operational costs and selling non-core assets. The PSB has made good progress in each of the aforementioned areas.

Jain had joined Indian Bank as Executive Director in September 2013 where he handled portfolios such as corporate & retail credit, SME credit, risk management, recovery & legal, accounts, technology management, banking operations department, business process re-engineering and compliance department.

Prior to joining Indian Bank, he served as General Manager with Syndicate Bank and handled various portfolios, including credit, operations, investment and risk management.

From nursing individual banks back to health so far, the new Deputy Governor may be required to do the same for all public sector banks currently under the PCA through suitable policy interventions. In the backdrop of the massive ₹14,000-crore letter of undertaking scam at Punjab National Bank, he will be expected to ensure tighter bank supervision so that there is no repeat of such scams. Central bank insiders say the new Deputy Governor will also have to look into staff policy matters and wage hike which are due for revision.