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

The Peak (Hong Kong) - - Contents - STORY RYAN SWIFT

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

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