Pratip Chaudhuri stint as SBI chmn ends: Here's a look back

Pratip Chaudhuri became the 23rd chairman of SBI in April 2011. His first task after taking charge was to reverse some of the policy actions of his controversial predecessor OP Bhatt. This included withdrawing the teaser loan scheme and plugging a Rs 10,000 crore hole in the balance-sheet left by unprovided pension liabilities. For the first time, SBI saw its profit plunge 99 percent to near zero levels. But the ominous shadow cast by his predecessor continued to haunt Chaudhuri during his entire tenure.

He waged a constant war with non-performing loans, which jumped to 5.27 percent in Q1FY14 from 3.52 percent in Q1FY12. But Chaudhuri constantly downplayed the growing stress in the system

“As we started March 2011, there was a spike in the gross NPA it went up from 25 to 27, 27 to 33 and then peaked at Rs 40,000 crore. Time and again we are confronted with the questions: Is the worst over? And we said that: Yes we seem to be getting right on top of the situation and we had even said in a metaphor that we have declared a war on NPA and we seem to be winning the war,” Chaudhuri told reporters in a press conference this year. 

These assurances did not give any relief to the market. SBI stock which was worth Rs 2900 per share in April 2011 eroded in value by a near half by the end of his term. Net profit dropped 5 out of 10 quarters and margins shrunk from 3.62 percent to 3.44 percent in Q1FY14.

But Chaudhuri remained focused on growing his loan book at a pace of 16-20 percent quarter-on-quarter. Analysts are wary of this growth as SBI continues to see fresh slippages every quarter.

Insiders say Pratip Chaudhuri was an authoritative leader who had a tendency for micromanagement. For instance, he departed from tradition by installing the chairman as the head of the asset and liabilities committee, which decides on the interest rate structure of the bank. Usually it's the CFO who heads the ALCO.

Also Read: Net NPA of banks rises to 1.68% in 2012-13: RBI

Even at board meetings, it was his view which prevailed over others. He also took on RBI on policy issues like banning CRR.

“It is not my case that CRR be abolished completely tomorrow, however, it certainly needs to be paced out within a reasonable time frame. The RBI also needs to consider paying interest on the impounded funds at a rate corresponding at least to the saving banks rate if not the repo or the reverse repo rate,” Chaudhuri had said.

But there are some positives as well. During Chaudhuri's time, SBI's share of bulk deposits came down sharply. He also dealt with the trade unions with an iron hand. But experts say challenges are plenty for the new person taking over as the new SBI chairman. Chaudhuri invited charges of kitchen sinking after his predecessor OP Bhatt's term ended. Markets now worry that his successor may have learnt the same lesson from him.