Banking on People
Padmaja Chunduru, who was Indian Bank’s MD and CEO between 2018-21, oversaw the successful merger of the bank with Allahabad Bank
THREE YEARS AGO, there were rumours that Indian Bank would be the frontrunner for a merger with a larger public sector bank. Padmaja Chunduru, Indian Bank’s new MD and CEO, wanted the bank to be the anchor bank rather than a target bank. In fact, the merger was not on the table when she began her CEO journey in September 2018. This veteran with nearly four decades of banking expertise was hand-picked by the government from the country’s largest bank, the State Bank of India (SBI), to lead the mid-sized bank. “The bank was well placed to be an anchor bank for consolidation in the public sector banking space,” says Chunduru. She started pitching the Indian Bank story to everyone who would listen. She was vocal about the bank's profitability record, management bandwidth and capital soundness. In August 2019, her persuasive skills paid off when the government announced Indian Bank as the acquirer for Kolkata-based Allahabad Bank, one of India’s oldest PSBs.
Chunduru’s leadership skills were on full display at the Indian Bank between September 2018 and August 2021. After she retired, the government rewarded her with the position of MD & CEO of the National Securities Depository Ltd (NSDL). In a three-year period, the bank’s total income increased by 32.28 per cent YoY to `45,185 crore. At `3,004 crore, the profit after tax has grown at a CAGR of 33.64 per cent. The return on equity was 11.61 per cent and the return on capital employed was 7.67 per cent, respectively. And the jury unanimously chose Chunduru as the winner in the BFSI category of the India’s Best CEOs ranking.
Chunduru’s tenure with Indian Bank was a challenging one. She came from SBI which had a different culture and exposure in terms of size and scale. But her early experience with SBI, from a rural branch in Vizag to running operations in the US, came in handy. “I felt much more capable of handling the situation. It helps a lot if you treat
your employees and customers fairly,” believes Chunduru. When she arrived at Indian Bank in Chennai, the first thing she attempted to set right was the long-term vision. She focussed on a well-defined plan for expanding across India. She also established a management information system (MIS) to monitor the business on a daily basis.
The merger announcement was a big victory for her. The amalgamated bank had a loan book of `3.51 lakh crore and deposits of `4.56 lakh crore as of March 31, 2019. Within a week of the merger announcement, she landed at Allahabad Bank’s head office in Kolkata to meet the senior management team. At the entrance, there was a demonstration by the unions. But she was unfazed. “I invited the senior team members to come to Chennai to work out the template for the merger,” she says. The biggest challenges for her were two different and distinct cultures and also different geographical footprints. “Docile South Indians and a little vocal North Indians,” Chunduru grins.
She found that Allahabad Bank was playing very safe in the corporate loan sector. The loan book was mostly skewed towards PSUs, MSMEs, agriculture etc. Chunduru’s past experience in setting up SBI’s corporate branch for large conglomerates at Mumbai came in handy. “I personally rang up the top corporate and big depositors of Allahabad Bank,” she says. Insiders talk about the story of two 150-year-old clocks at Allahabad Bank. She carefully brought one of the clocks to Chennai to put it in the bank’s boardroom. These unsaid things and optics like respecting their heritage created bonhomie amongst the two teams that came together after the merger. In the shortest possible time, the merger integration was completed. The core banking system (CBS) integration between the two banks was completed successfully in February last year. The bank also rationalised the branches, zonal offices, and currency chests. Chunduru also tried her best to encourage women to take up higher roles. “You don’t find women at decision-making levels,” she says. The bank has a new MD & CEO—Shanti Lal Jain— who is now building it from where Chunduru left.
Jitendra Upadhyaya, Senior Research Analyst at Bonanza Portfolio, says that increasing competition from new-age fintech players will be this mid-sized bank’s biggest challenge. “A few years ago, large PSBs were not able to service or provide loans to small borrowers due to [that] operationally (cost-wise) not making sense. However, now large banks can also lend to small borrowers through tools such as co-lending agreements.” That translates into double competition for Indian Bank. Bhushan Mahajan, MD at Arthbodh Shares and Investments, says its major challenge is to create a niche bank, competing with large PSUand private banks, with credit growth matching deposit growth when corporate offtake is muted.