SBI, BoB top pick in PSU banking space: Kunal Shah

Kunal Shah, Associate Director at Edelweiss Securities told CNBC-TV18, "We have turned positive on state owned banks in March. Looking at the government initiatives as well as the regulatory support which is coming in, we thought that the structural reforms are due to take place in most of the state owned banks particularly the leading ones like State bank of India (SBI) and Bank of Baroda (BoB). So the immediate steps in terms of MD and CEO appointment and also in terms of the capital allocation is what the government has already announced. But what needs to be looked at is that they have addressed the softer aspects which would impact the functioning of the banks from a longer term perspective. So, be it in terms of the say, the performance based incentive wherein now they have the KPIs jotted down which have not been the case, say, in the previous decade. So, now they have a specific set of parameters on which they will be evaluated.""Apart from say, the MD & CEO the other board members also with say, the functioning of the bank board bureau expected to kick in from say, April 1, 2016 you will see a more professional management out there in case of the state owned banks. Thirdly they have empowered state owned banks by lowering the government interference and at the same time they have made it much more accountable as well. So, this is where they are actually bridging the gap with the private banks and the banks with much more quality franchise which is like, say, BoB and SBI that continues to be our top pick in this space," he said.