Rajnish Kumar, 62, will bid farewell to State Bank of India this evening, after having served the institution for 40 years, the last three of those as Chairman.
Kumar is hanging his boots at a time when the banking sector as a whole is facing an unprecedented crisis. Credit growth is at 40-year lows, reflecting the problems of an economy in the midst of a slowdown. Public sector banks’ stressed assets ratios have been in double digits for the last seven years, and Reserve Bank estimates bank NPAs may rise to the highest level in 20 years by March next year due to the pandemic-induced stress.
Yet, Kumar comes across as calm, and in control. “Think it is safe to say that as of June we have been declared asymptomatic (of bad loan issues),” he said after the bank surprised the streets with a better than expected earnings report card this June.
It is this calm demeanour that perhaps ensured Rajnish Kumar did not face any big controversy throughout his tenure, not even when he openly criticised his private bank peers for being selfish in a case involving Altico Capital.
Under Rajnish Kumar, the bank’s gross bad loans reduced by a third from Rs 1,86,115 crores in Q2 FY18 to Rs 1,29,661 crores in Q1 FY21. During the same period, the ratio of gross NPAs fell from 9.97 percent to 5.44 percent, and provision coverage ratio improved significantly from 65.1 percent to 86.3 percent. For FY20, the bank posted a historic high profit of almost Rs 14,500 crores, another feather in the Chairman’s cap. Kumar leaves the bank a lot more resilient than when he took charge on October 7, 2017.
His biggest achievement, perhaps, is the swift and sure turnaround of the troubled Yes Bank, which was executed under Kumar’s chairmanship. The bank saw unprecedented support from the entire banking industry, helmed by State Bank of India, which pumped in the capital in the bank to take a majority stake, and brought much-needed comfort to investors and depositors alike.
It is because of acts like this that investors often joke that State Bank of India is the “rescuer of the last resort”, and can be called upon to save any failing financial institution or sector. Perhaps, also the reason why FIIs haven’t warmed up to the SBI stock. The stock has continued to underperform under Rajnish Kumar’s Chairmanship. Therefore, one of the biggest disappointments of his tenure is also the lack of shareholder value creation. While Kumar projected that SBI would be able to achieve a one percent return on assets (RoA) by this financial year, it has barely delivered even half of that.
One of Kumar’s grouse has been that the markets have been unfair to the SBI stock. Since Kumar took over in October of 2017 until now, the stock has fallen by over 30 percent, despite the relatively better financial performance of the bank compared to its PSB peers. In one of the bank’s recent analyst meets, Kumar remarked that if somebody sneezes, everybody feels State Bank will get the flu, implying that the markets have punished the stock irrationally.
Kumar has often displayed this sense of humour when facing adversity. Once, when asked about the steep haircuts banks were facing in NCLT-led resolutions, Kumar said, “We don’t mind a haircut but we don’t want to be bald.” In another instance, when quizzed about why recoveries from large bankruptcy cases like Essar Steel, and Bhushan Steel were taking so long, Rajnish Kumar was quick to respond, “Every quarter I am looking towards the sky and god (to ask) when will we get all those decisions and recover the amount.”
Kumar says he gets his spirituality from his mother. Her daily Ramayana recitals had a strong impact on him, and he still enjoys reading books on Hindu mythology in his free time. His father worked in the irrigation department in Uttar Pradesh, where he brought up Kumar and his three other children.
A student of Physics in the Meerut University, Kumar applied to the Bhabha Atomic Research Centre in Mumbai for a job but claims he “fled the city terrorised.”
He gave two attempts for the civil services exams and even made it to the preliminaries, before he got a job at State Bank of India as a Probationary Officer (PO). His first posting was in Auraiya tehsil in Uttar Pradesh, close to the district where the infamous Phoolan Devi Behmai massacre took place while Kumar was working in the SBI branch some 20 kilometres away. Many interesting postings and a few decades later, Kumar was back in the city he had left, occupying the corner office of the country’s largest bank in Mumbai’s posh Nariman Point.
Kumar said he’s also missed a promotion or two, before he got the top job, but his philosophy has always been to enjoy the job at hand. He handled various assignments across verticals including large credit, project finance, forex, retail banking, and even headed the bank’s investment banking arm- SBI Capital Markets, before he took over as Chairman.
Among his key achievements is also the execution of SBI’s mega merger. While the merger of SBI with its five associate banks and Bhartiya Manila Bank was initiated under his predecessor Bhattacharya, the back end integration was completed under Rajnish Kumar.
Rajnish Kumar is also credited with strengthening SBI’s digital reach, through its platform YONO. The application, which is SBI’s integrated banking platform, had 24 million registrations as of June end. Kumar had ambitions to hive it off as a separate subsidiary, and estimates it may command a valuation of USD 40 billion. This is an ambition which his successor will have to carry forward now.
Among other notable initiatives introduced by him is a new Voluntary Retirement Scheme (VRS) which will be on-tap and could help the bank save over Rs 2,000 crores assuming a third of the employees opt for it. He also set out to build the “work from anywhere” infrastructure, which also remains work in progress.