After losing out market share to competitors, India’s PSU bank is slowly becoming a one-stop financial shop. By asif ahmed
One down, six more to go! That’s what O.P. Bhatt, the Chairman of State Bank of India, must have thought as he prepared himself for Herculean task in front of him. On that particular day, he was supposed to interact with the boards of SBI’s six associate banks to consider the biggest merger in the history of Indian banking industry. Of the bank’s seven associates, the merger of the State bank of Saurashtra with the parent bank had already been approved; the remaining would happen soon, thought Bhatt.
But that fateful day never came. Intense opposition from the Left parties that supported the UPA Government at the Centre, and bank trade unions forced Bhatt to never attend the crucial meeting. In fact, the meeting wasn’t held at all, and the proposed merger was indefinitely postponed. However, this is one credit that Bhatt would like more than anything else. This is despite the fact that the SBI chairman has changed the way India’s largest bank interacts with its customers.
How the times have changed for SBI in the past few years. As competition intensified, SBI was hit by falling market share, had to raise funds for expansion, and look for new avenues for growth. For instance, in 2004, the State Bank Group (SBG) accounted for 27.8% of the total banking assets, which fell to 23.3% in 2007. In terms of deposits, while SBG controlled 27.6% of deposits in 2004, the figure shrunk to 23.5% in 2007. But still, Bhatt is thinking in terms of a banking mega merger.
The reason: Bhatt knows that size matters. If SBI can become a banking and financial powerhouse, it will be in a better position to combat private and foreign players. It’s only when it becomes bigger and better will SBI be able to arrest its falling market shares in various categories. Apart from the proposed merger, Bhatt has sought organic growth for SBI in India, and other neighbouring countries. The strategy was unlike that of his predecessor, A.K. Purwar, who believed in acquisitions-related growth.
One down, six more to go! That’s what O.P. Bhatt, the Chairman of State Bank of India, must have thought as he prepared himself for Herculean task in front of him. On that particular day, he was supposed to interact with the boards of SBI’s six associate banks to consider the biggest merger in the history of Indian banking industry. Of the bank’s seven associates, the merger of the State bank of Saurashtra with the parent bank had already been approved; the remaining would happen soon, thought Bhatt.
But that fateful day never came. Intense opposition from the Left parties that supported the UPA Government at the Centre, and bank trade unions forced Bhatt to never attend the crucial meeting. In fact, the meeting wasn’t held at all, and the proposed merger was indefinitely postponed. However, this is one credit that Bhatt would like more than anything else. This is despite the fact that the SBI chairman has changed the way India’s largest bank interacts with its customers.
How the times have changed for SBI in the past few years. As competition intensified, SBI was hit by falling market share, had to raise funds for expansion, and look for new avenues for growth. For instance, in 2004, the State Bank Group (SBG) accounted for 27.8% of the total banking assets, which fell to 23.3% in 2007. In terms of deposits, while SBG controlled 27.6% of deposits in 2004, the figure shrunk to 23.5% in 2007. But still, Bhatt is thinking in terms of a banking mega merger.
The reason: Bhatt knows that size matters. If SBI can become a banking and financial powerhouse, it will be in a better position to combat private and foreign players. It’s only when it becomes bigger and better will SBI be able to arrest its falling market shares in various categories. Apart from the proposed merger, Bhatt has sought organic growth for SBI in India, and other neighbouring countries. The strategy was unlike that of his predecessor, A.K. Purwar, who believed in acquisitions-related growth.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
