BANKING ON EQUALITY
State Bank of India Chairman Arundhati Bhattacharya oversaw the demonetisation of India from her perch as one of the highest-ranking officials in Indian finance. She credits women with being able to handle rapid changes – a handy thing given the enormous
State Bank of India Chairman Arundhati Bhattacharya talks demonetisation and what it’s like to be a woman at the top of the financial world
On the evening of November 8, 2016, the heads of India’s banks were brought together to a special room of the Reserve Bank of India for a special announcement. None of the bankers gathered had any idea what was about to happen. They gathered at 6pm for tea and biscuits, and engaged in some polite chit-chat. At 8pm, Indian Prime Minister Narendra Modi came on the air and announced a bombshell – all Indian cash notes in the 500 and 1,000 rupee denominations would no longer have value as of midnight, and they would be replaced by new 500 and 2,000 notes. The leaders of India’s banking system had found out about a monumental policy shift at the same time as the rest of India’s people. From that room in the Central Bank, no phone calls or communications could be made.
The stated aim of the demonetisation programme was to try to quash corruption and money laundering – serious problems in India. But for Bhattacharya, it was a moment of panic. “My first thought was, ‘how do I get out of here fast enough?’”, she says of that night. She was right to be concerned. The next day was a bank holiday, and then banks would re-open on the 10th, with a population nearly the size of China’s wanting to exchange notes. About 86 per cent of the paper currency in a largely cash-intense economy (estimates have the economy at being 90 per cent cash reliant) had just been nullified. Bhattacharya and her managers had 36 hours to get ready.
There were a host of major logistical questions to be settled in record time: how to transport shipments of the new cash; what records to keep on exchanges; what penalties there would be for laggards; how to communicate everything, including all the new operating processes, to all the branch managers – let alone the customer base? It was a massive undertaking that had to be organised on the fly.
By 9:15pm that night, Bhattacharya had left the Central Bank and was on her way home. She called an emergency meeting, bringing together her top managers to her house. Their reaction was one of disbelief. “I think there wasn’t any scope or time for panic. You’re on the job, so you just have to get cracking,” Bhattacharya says of that night.
The meeting went on until late. Video conferences with personnel around the country were organised for the next morning. A mountain of cash had to be physically moved to locations all over India, a country well known for its incomplete infrastructure. As it turned out, the new bills were of different sizes than the old ones, meaning that ATMS would have trouble handling them.
Bhattacharya has the bearing of a kindly grandmother and goes almost everywhere in a traditional sari. That kind of maternal calm presumably has its benefits in the face of a crisis. “I would say it was a difficult exercise, but still well done. In spite of all the negative stuff you have seen in the media, there wasn’t a major law and order issue, no rioting, nothing of the sort. I think the reason [for that] is because we did our job well,” Bhattacharya says.
In her reckoning, it also helped that the public was behind the measure, despite the troubles that were experienced. The demonetisation undertaken by the Indian government is now seven months on, and so far, the initial economic upsets caused by the shock change seem to have been overcome.
The debate, if there is one, is whether the stated aims of cutting corruption and encouraging a shift to a cashless society have actually been helped at all. Bhattacharya reckons that the sudden move was effectively a “shot across the bow”
“IN SPITE OF ALL THE NEGATIVE STUFF YOU HAVE SEEN IN THE MEDIA, THERE WASN’T A MAJOR LAW AND ORDER ISSUE, NO RIOTING, NOTHING OF THE SORT”
– Arundhati Bhattacharya
of corruption, letting the black market know that the government was serious about tackling the issue. Other observers are less sanguine. Bhaskar Chakravorti, associate dean of international business and finance at Tufts University in Massachusetts, reckons that returned cash had been effectively validated as legitimate, while leaving US$2 trillion worth of offshore holdings untouched.
Yet, Chakravorti has also noted the degree to which India’s other stated goal – of transitioning to a cashless economy – has been spurred by demonetisation. State Bank of India (SBI) has indeed been a net beneficiary of the move. Bhattacharya reckons that the bank’s debit card activations in the 50 days after the demonetisation announcement were equal to the previous three years of activation. Some 35 per cent of debit cards in circulation in India are now from SBI.
The bank is also spearheading a move towards remaking India’s economy into a completely cashless society, where all transactions are conducted online. SBI, along with most major banks in India, offers apps that can allow users to transfer payments from any account to any account, no matter which bank you get the payment app from.
Biometrics is also on the cards. From 2010, India has developed the Aadhaar biometric database, which assigns a unique, 12-digit code to each person. Over 1.1 billion people now have a number, creating the world’s largest biometric database, and also the basis of a payment system. Bhattacharya says SBI is combining its payment transfer apps and Aadhaar numbers in such as a way as to on-board merchants to accept all forms of digital payment. Meanwhile, using a team of 50,000 “business correspondents”, SBI has opened up 100 million accounts of previously unbanked citizens. Bhattacharya indicates that it is the latest developments in digital
technology that will let her reach the 40 per cent of India that is still unbanked.
Bhattacharya, despite the grandmotherly bearing and the fact that SBI is state-owned, is very keen on tech and innovation. During a visit to Hong Kong to attend an Asia Society luncheon in March, she proudly pointed to the fact that India’s digital payment technology is already leapfrogging the rest of the world, though pickup still has a long way to go. In an email, Bhattacharya says that she developed “a very large team” to work on digital initiatives, with a senior official in charge. “We are going through very exciting times, and huge data is being churned out, which will help us improve our products and processes.”
Despite being a state-owned lender, SBI under Bhattacharya has performed some other big moves of late. Aside from getting people and merchants to use its common payment interfaces, SBI recently merged with five subsidiaries to create one of the world’s top 50 banks in terms of assets. The merger with the five banks, which was completed on April 1, 2017, required a level of effort similar to, perhaps even greater than, demonetisation. In addition to seeking cost effectiveness – by reducing the number of overlapping branches for instance, or reducing workforce numbers, SBI has regional ambitions, with branches opening in Myanmar, Sri Lanka, Nepal and Bhutan.
Shares in SBI stock have performed well over the past year, climbing nearly 100 per cent since May 2016, regaining losses from the year before.
THE HR SOLUTION
One topic Bhattacharya loves to discuss is how good women are with money. Women, she believes, are more organised than men, and excellent at multitasking.
“We, being in the service sector, realise this fact and encourage women to take leadership roles at the bank,” she says. Bhattacharya points out that she has appointed women to some of the most important – and forward-looking – positions at SBI. The head of digital and new business is a woman, as are many verticals headed up by female employees, who constitute onequarter of SBI’S 200,000-strong workforce.
Most famously, Bhattacharya greatly extended paid maternity leave and granted generous women’s health benefits on becoming SBI’S first-ever chairwoman; moves designed to encourage women to climb higher in the bank, and also to keep them working there. “I have a firm belief that the bank’s performance and productivity will improve with the rise of female employees,” she says in an email to The Peak. In a move that would be shocking in Hong Kong, Bhattacharya introduced a two-year sabbatical leave programme, which lets employees take two years from work in order to provide care to children, pursue higher studies, or deal with medical situations.
Asked what it’s like being ranked as one of the most powerful women in the world of finance, Bhattacharya lists a number of women in the industry in India holding top positions. In her reckoning, a whole cadre of female bankers started their careers in the late 1960s, when the Indian government nationalised banks and, in an effort to reach out to the poor, ordered banks to open branches all over the country.
Subsequently, a huge new group of bankers were required, and these positions were filled by people taking a standardised test to see who would get the jobs. The test was “meritocratic”, meaning
SBI RECENTLY MERGED WITH FIVE SUBSIDIARIES TO CREATE ONE OF THE WORLD’S TOP 50 BANKS
that women applying for jobs didn’t need to have connections to an old boys’ club. In addition, family guardians felt that banking was a “safe” job for women. As a result, a generation of women began rising to the top of banking.
All this is set against the backdrop of India’s very low female participation rate of just 33 per cent, according to a 2015 IMF study – well behind the global average of 50 per cent, and East Asia’s average of 63 per cent. In global finance, women are well represented at the lower levels of firms, but tend to be highly underrepresented at the top levels. Bhattacharya sees strengthening women’s work at the highest levels to be a means of preparing for big changes.
Bhattacharya joined SBI in the late 1970s and has been with the bank ever since, rising to lead various departments before finally being named chairman in 2013. The long trek to the top meant she also developed ideas along the way about how to improve morale, one of them being open communications – something the bank was missing during her youth. It is how she has managed enormous changes to the bank, such as demonetisation, and also how she has pushed through programmes to help women in a relatively staid organisation.
Ironically, despite the fact that Bhattacharya is regularly listed as one of the world’s most
DESPITE THE FACT THAT BHATTACHARYA IS REGULARLY LISTED AS ONE OF THE WORLD’S MOST POWERFUL WOMEN IN FINANCE, HER TAKE-HOME PAY COULD ACTUALLY BE APPROXIMATELY THAT OF A US-BASED MCDONALD’S FRONT LINE WORKER
powerful women in finance, her take-home pay could actually be approximately that of a Us-based Mcdonald’s front line worker, according to a 2015 report in Bloomberg. Pay is very low at all levels of India’s state owned banks, the report noted, especially compared to pay levels in private banks. The addition of so many helpful programmes may be, in part, a result of the need to retain employees.
During a stint as the bank’s HR director, Bhattacharya created an internal communications website, to cut layers from messaging – both up and down the management. “It was not something that was considered important at the time,” she says. “It was not even considered welcome, so I did it under the radar. When I became chairman, I promoted it a lot through my senior managers, to have their own following. And to ensure that whatever people write to me, that it gets a response.”
Bhattacharya is due to step down from her post in October, and afterwards, she may become one of the world’s most soughtafter handlers of change.
BOTTOM Digital payment systems are growing fast in India's cash intense economy
ABOVE India's banking leaders gather for the 2015 MINT conclave
RIGHT Bhattacharya is SBI'S first-ever female chairman