SBI, a synonym for resurgent India

Effective last weekend, State Bank of India, the country’s banking icon, has begun a new journey after merging five of its associate banks and the Bharatiya Mahila Bank with itself, reiterating its position in our banking landscape as numero uno with a solid 23 per cent market share, both in deposits and advances.

While its entry into the world’s top 50 banks is already known, what is equally noteworthy is that now SBI becomes arguably the bank with the highest market share in any major economy. This makes SBI matchless within even this top-50 club.

Just a few comparisons should provide the base for this hypothesis. While the world’s topmost bank by assets, the Industrial Credit Banking Corporation of China (ICBC), has a market share of 17 per cent in China, JP Morgan Chase, another global leader, has only a 14 per cent share in the US. Neither BNP Paribas of France nor Bank of Tokyo-Mitsubishi UFJ in Japan, both figuring in the top 10 global banks, has a market share in their respective countries close to SBI’s, covering both deposits and loans.

In a league of its own now, SBI becomes even more emblematic of the resilence and growing maturity of the Indian economy — in financial terms, it is a proxy for a sovereign. India also happens to be the fastest growing major economy in the world. Quite strikingly, in terms of client base, it can be said that if SBI’s customers were a country, they would be the third most populous nation at 50 crore, ahead of the US! What does the merger mean for the medium-term, and the long-term prospects of this institution which traces its origin to 1806 when the Bank of Calcutta was formed? With a multinational presence, it is now unique among Indian public sector entities for an uninterrupted track record of profitability coupled with a deep-rooted commitment to social uplift.

Over the past several decades it has been able to attract the brightest and the best and has functioned as a powerhouse for the industry as a whole. In the first wave of new bank licensing which India witnessed in the nineties, the erstwhile UTI Bank (now Axis Bank), Indusind Bank and ICICI Bank were all headed by former SBI bankers such as Supriyo Gupta, Solomon Raj and N Vaghul, respectively. The talk then was that the competition was between people who are in SBI and those who were in SBI. The only exception was HDFC Bank.

While earlier too, betting on SBI was analogous to betting on India, the odds would favour this bet even more now. If India is to grow, it will do so with SBI and if SBI is to flourish, it will do so with India.

Never before has a nation and one of its financial market players become so inextricably intertwined that speaking of one’s prospects is tantamount to talking about the other. In that sense, there is a heavier responsibility on Team SBI. The bank has always offered services that cover a range of clients, spanning the smallest borrower to the biggest corporate. It has bridged and narrowed the gap between the last man out there in the hinterland of India, and the wealthiest of them, in the metros. The challenge now will be to scale up this role, be all things to all domestically, and yet retain a global competitive edge. This will truly yoke SBI’s future more firmly to our nation’s economic advancement.

The merger can exploit the niche-market strengths of its five associates to propel further the pole-position of the mother brand, by enmeshing the micro-potency of the former with the macro-stature of the latter, topping up efficiencies.

Among the merged banks is also State Bank of Mysore, the smallest public sector bank. I remember a conversation in 2012 with R Chellappan, now the CEO of Swelet Energy Systems (formerly Numeric Power Systems), who sold his 26-year-old company to French major Legrande for ₹829 crore then. Born into an ordinary Salem family, Chellappan recalled his ₹25,000 loan from SBM in 1986 when he made the first UPS all by himself. “SBM helped me reach up to the Legrand deal,” he had said. Chellappan is one among many nurtured by the associates to reach heights they had never dreamt of. Through this merger, customer connects for SBI will both deepen and widen.

SBI was a resilient structure of nearly 17,000-odd branches which are tightly-controlled with strong systems and procedures. That network has now becomes close to 24,000.

Perhaps there is no better integrator of people and cultures than SBI in India’s contemporary body-politic which has kept us ticking as a nation.

Well endowed in human resources, it has seen a string of outstanding leaders, not least among whom was the legendary Raj Kumar Talwar, who spoke truth to power in extraordinary circumstances during the Emergency in 1975. He paid the price for the sake of institutional and personal integrity at a rather tender age for a chairman. When he was forced out of office at 54 he had been at the helm for seven years.

Latter-day SBI has also had an array of chairpersons with the trend-setting OP Bhatt, the meticulous Pratip Choudhary, and the first woman to head the bank, widely acknowledged as a clear thinker and lucid communicator, Arundhati Bhattacharya. It has a durable and diverse second line of leadership as well.

The historic change comes at a time when a Prime Minister whose passion for “ param vaibhavam ” (greatest glory) for India has only been matched by his dedication to “ antyodaya ” (uplift of the last-mile man). A bigger bank with dispersion in vertical terms financially and horizontal terms geographically, should become the engine for our great nation’s march forward.

The writer joined the State Bank group in 1985 and is a senior executive now. The views are personal