Even after spending an exhausting day at Mundra Port in Gujarat, Om Prakash Bhatt is as sprightly as ever. Arriving in a black T-shirt, the 57-year-old boss of India’s largest commercial bank, State Bank of India (SBI), looks smart and immediately apologizes for being a few minutes late.

“Don’t ask me the brand of my T-shirt; I don’t know. My wife buys my clothes," Bhatt says, as we enter Jewel of India at Nehru Centre, Worli. This is hardly surprising. Bhatt is a busy, hands-on man. A firm believer in the adage “seeing is believing", he often visits ports, factories and even a business process outsourcing unit. “You must know who you are lending money to, and the competition. This is the best way to know your borrowers and their industry," he says.

Bhatt likes red wine but orders a Laphroaig to give me company. “I hope you’ll like its smoky taste," he says, and calls for the bottle to check the age of the single malt whisky.

Hard taskmaster: Bhatt is an expert at getting the best out of his staff. (Jayachandran / Mint)

And for a reluctant recruit, Bhatt has performed remarkably well. Within a year of taking over as chief general manager of the bottom-ranked north-eastern circle of SBI, Bhatt lifted the circle to the No. 1 position.

In his next assignment as the managing director of the State Bank of Travancore, Bhatt changed the profile of a traditional traders’ bank into a retail bank and aggressively sold mutual fund and insurance products. The State Bank of Travancore is one of the seven associate banks of SBI and many SBI bosses, including Bhatt’s predecessor A.K. Purwar, were groomed for the top position at these banks.

His route to the top of SBI, though, was anything but a cakewalk. Bhatt became a managing director of SBI after a keenly fought run-off with four of his colleagues—all belonging to the same batch of probationary officers. All five were interviewed in September 2005, three months before the managing director’s post fell vacant, but Bhatt got the government nod in April 2006. “Although I was an SBI representative in the US, people who wanted to block my way dubbed me as a liaison officer," says Bhatt.

Bhatt was later elevated to chairman in July 2006 . The first thing he did was to stop the roll-out of core banking solutions in SBI branches. “We were mechanically rolling out technology without checking if it was beneficial to customers. I asked TCS (Tata Consultancy Services Ltd, which was implementing the project) to read the riot act. Everybody was shocked at my audacity. But we needed some 700 modifications before the project restarted and, TCS rose to the occasion splendidly," says Bhatt.

With the same “audacity", Bhatt is now on a branch-opening spree. In the past five months, he has opened 955 branches— more than six branches a day on an average.

Why does SBI need so many branches when there are alternative channels such as, mobile phones and the Internet, that everyone is keen to hop on to? “One of the reasons behind SBI’s market share going down is its absence in strategic locations. Over the last 10 years, we have been saying SBI has 9,000-plus branches. Yet, there are 2,000 semi-urban centres where the SBI group does not have a single branch. So, now we plan to open 2,000 branches every year and take the network to 20,000 and almost triple the number of ATMs from 8,500 to 25,000. Why should the ATMs be only cash dispensers? We want to use these machines for many other business transactions such as issuing chequebooks, bill payments, and so on," Bhatt says. To support this business plan, the bank has been recruiting people aggressively. Last year, it recruited 9,000 people, and the plan is to get 15,000 people this year.

The results, Bhatt claims, are showing. “Our home loan portfolio has grown 27% this year, higher than the competition. Similarly, the auto loan portfolio’s growth has been 30%. You can’t call SBI a sleeping elephant any more," says Bhatt with a wide grin.

Bhatt also wants to merge the associate banks with SBI to build scale. He initiated this exercise last year with a proposal to merge State Bank of Saurashtra, the smallest of the associate banks. The proposal is awaiting government approval. “It is taking a little time but the merger is inevitable. Currently, there is a positive environment created for consolidation within the SBI family. We will not push for it but (will) pursue individual cases. It will be easier to merge the unlisted banks first," he says.

In the mid-1990s, consultancy firm McKinsey and Co. had suggested the merger of seven associate banks with SBI or among themselves. But, none of Bhatt’s predecessors made any move in the face of stiff resistance from trade unions. Bhatt also has an “open mind" about acquisitions abroad and the Rs16,700 crore kitty raised through a rights issue may come in handy. “We will use the money to grow our assets, and overseas acquisitions are possible," he says.

It’s time to fill his glass, but this time he sticks to his favourite red wine to wash down a spartan meal of tandoori roti, sabzi kadai and dal.

SBI is buzzing with activity nowadays. The bank is looking to cover 100,000 villages under the financial inclusion programme; enter the private equity and pension businesses, launch custodial services—and is not very far away from identifying a partner for the general insurance business.

In the private equity space, it has already acquired 19.75% in Sage Capital Fund Management, an Indian private equity firm that plans to raise a $200 million (around Rs800 crore) fund. The bank is floating an infrastructure fund with the Macquarie Group and talking to Unitech Ltd for a realty fund. A deputy managing director (DMD) of the bank now looks exclusively at business innovation.

Does the bank pay its employees performance-linked incentives? Bhatt does not believe in incentives that are not in conformity with the SBI culture. “I am for those kind of incentives that help them inculcate value and not encourage greed," he says. Early this week, around 20 branch managers with their spouses were invited for dinner at his bungalow in south Mumbai. These branch managers were chosen as members of the chairman’s club, based on their performance. The ritual is not new, but Bhatt gave it a personal touch by hosting it at his home. “This is one incentive they will cherish for long," Bhatt says.

He seems to excel at getting the best out of his colleagues. So, before we get up, I ask him a very uncomfortable question: Why is he taking away powers from his managing directors (MDs)? Earlier, the bank’s two MDs were looking after national banking and corporate banking. Now, these portfolios have been split and distributed among DMDs and the bank’s current MD has been looking after risk management. Isn’t Bhatt making himself more powerful?

Changing business realities, Bhatt explains, are behind his reshuffling exercise. Indeed, big corporations were the bank’s major borrowers but now SBI’s exposure to these companies is Rs35,000 crore while its mortgage portfolio is Rs42,000 crore. “Things are not static and the relative importance of business groups is changing. With the economy becoming more and more complex, risk management is the most important job in any bank. Shouldn’t I have the authority to decide who will do what in the bank? I am doing this to increase the efficiency of the bank and not to make myself more powerful. And besides, it is well within the rules set down by the SBI Act."

As we wait for our cars, Bhatt whispers into my ears: “Write anything you want about me. But, the bank is more important than any individual. Don’t harm the bank."


Born: 7 March 1951 at Dehradun (Uttarakhand)

Education: National Science Talent Search Scholar in physics at DAV College, Dehradun; MA in English literature, Meerut University

Career: Joined SBI as a probationary officer in July 1972. Made chairman in July 2006

Car: Toyota Camry

Favourite Movie: ‘The Legend of Bagger Vance’

Last Book Read: ‘If Better is Possible’ by John Buchanan

Favourite Holiday Spots: Hills in the North-East and Uttarakhand