Saturday 25 July 2020

Strange and Interesting Coincidences

An article appeared in news on July 02, 2020 in Financial Express newspaper:

SBI seeks external consultants for risk management division  article stated:

State Bank of India (SBI) is looking for consultants for its risk management division to incorporate external inputs in its risk-modelling function in areas ranging from stress testing to climate change. The country’s largest lender floated a request for proposal (RFP) for empanelment of consultants in June for a five-year period.

The plan to engage external consultants is understood to have been in the works for a few months now. “The thinking within the bank has been that when certain new and unprecedented developments happen, you need inputs from external experts. For example, the Covid outbreak may render the bank’s entire database ineffective and an entire remodelling has to be done. That’s when external inputs become important,” said a person close to the development.

Interestingly McKinsey Quarterly July 2020 issue has the following:

How the State Bank of India is learning from crisis (July 24,2020) interview with State Bank of India Chairman Mr. Rajnish Kumar. Interview starts with:

How should a leader approach a challenge as unprecedented, volatile, and globally disruptive as the COVID-19 pandemic? As a learning experience. That’s the attitude of Rajnish Kumar, chairman of the State Bank of India (SBI). The veteran banker, who joined SBI in an entry-level role four decades ago, is now tasked with leading India’s largest financial institution through an uncertainty that no organization had anticipated.

Interview covers other aspects about leadership required by SBI Chairman during these testing times and other aspects.

The interview was conducted by:

Akash Lal , Senion Partner , Mumbai
Expert in Financial Services

Joydeep Sengupta , Senior Partner , Singapore
Joydeep leads the Asia–Pacific Banking Practice and has served leading financial institutions across multiple markets in Asia and Europe. Joydeep has deep expertise in architecting and executing multiyear business transformations. His experience in digital, strategy, organization, risk, and change management allows him to counsel and work with CEOs on capturing value.

His recent work includes supporting the transformation of leading banks and insurers in Asia, with a focus on innovation and changes in business models and culture driven by the new digital economy. He is also actively involved in serving regulators and policy makers across several markets in Asia on topics related to banking-sector blueprints, digital infrastructure, payment systems, and regulations.

Rewind Year 2009 / 2010

McKinsey Quarterly April 01, 2009 under Insights section.

Remaking a government-owned giant: An interview with the chairman of the State Bank of India interview starts in the following way:

Om Prakash Bhatt discusses the transformation of one of India’s oldest banks and reveals how he managed to bring the company’s 200,000 employees on board.

Om Prakash Bhatt is intensely loyal to the State Bank of India (SBI). “This was a great bank, and it was seeing relatively bad days,” says Bhatt, who joined the bank in 1972 as a probationary officer and was named chairman in 2006. “They put me in the chairman’s seat, and it was up to me to do something. If not me, who would?” SBI—the country’s largest bank by assets—had fallen on tough times when Bhatt took charge of the state-owned institution. With roots stretching back to 1806, this stalwart of the Indian economy was losing market share to up-and-coming private banks and a growing list of foreign players reaching customers with new products and new technologies. State Bank, in which the government has a 60 percent interest, was languishing in inertia.


O P Bhatt  - from wikipedia

Om Prakash Bhatt (born 7 March 1951) is an Indian banker and was the Chairman of State Bank of India from June 2006 until 31 March 2011.

From Economic Times archives March 04, 2010 (last updated).

Extracts from the Economic Times archives:

State Bank of India (SBI) has now engaged McKinsey & Co to advise it for building bank's rural business and has paid a total of Rs 62.8 crore to the global consultancy firm since 2007 for various advisory services. 

The bank had paid a consultancy fee of Rs 9.99 crore to the US-based McKinsey & Co in 2006-07, the Minister said, adding, the company was engaged in 2007-08, 2008-09 and 2009-10 and was paid a total of Rs 62.71 crore. 

The most interesting part of the archived article was very very strange:

"SBI had engaged McKinsey & Co as consultants in January, 2007, for a period of four months for building bank's rural banking business. However, the engagement was temporarily put in abeyance after some time due to operational reasons," Minister of State for Finance Namo Narian Meena said in a written reply in the Rajya Sabha today. 

The bank has engaged McKinsey & Co in March 2010 for a period of 4 months to resume the engagement of 2007, he said. 

McKinsey was asked to resume a work in the year 2010 (for four months) the work which was started in the year January 2007 and temporarily halted around April 2007/May 2007. 

In short McKinsey advised then State Bank of India under Chairman O P Bhatt in the year 2007 and got paid in the year 2010. 

In other words old outstanding for the year 2007 was recovered by McKinsey from State Bank of India in the year 2010.

SBI  Chairman O P Bhatt was featured in the McKinsey Quarterly for an interview in the year 2009.

Strange Coincidences.

Back to 2020:

SBI Writes Off Rs1.23 Lakh Crore of Bad Debt, Recovers Paltry Rs8,969 Crore in 8 Years!

Source: Moneylife magazine

The article in Moneylife magazine is worth reading as it displays the recovery ratio of old outstanding of State Bank of India a Public Sector Bank.

And McKinsey recovered an outstanding after four years, it displays the recovery ratio of a private enterprise.

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