C S Setty: SBI's New Boss

'You will see him frequently asking customers -- especially retail -- about service experience, pain points, areas of improvement and suggestions.'

For Challa Sreenivasulu Setty, from a rural financier's family in Andhra Pradesh, entering the banking profession was a natural progression.

On Saturday, June 29, 2024, the Financial Services Institutions Bureau (FSIB) recommended Setty (who turns 59 in September) -- one of SBI's managing directors -- as the next chairman of the country's largest lender.

FSIB makes recommendations to the government for the appointment of senior executives in public sector financial institutions. Being recommended to the top post of SBI -- with a Rs 61 trillion balance sheet and 500 million customers -- is certainly recognition of Setty's talent, grit and performance.

His colleagues at the bank and those from the banking fraternity point to his zest for enhancing standards. His focus has been on building competencies in people and systems.

"You will see him frequently asking customers -- especially retail -- about service experience, pain points, areas of improvement and suggestions," said a senior SBI executive working in retail operations.

Setty is known for speaking out his mind, and he does it politely and respectfully, recollects one SBI field staffer, who has worked with him in a digital banking project.

Fellow bankers, including one from a peer bank, said humility and holistic approach as well as the ability to take people along are his key attributes.

A BSc in agriculture, Setty started his career with SBI in 1988 as a probationary officer. Across a career spanning over three decades, he has vast experience in corporate credit, retail, digital, international banking, and banking in developed markets.

As MD, Setty is looking after international banking, global markets and technology portfolios now.

The FISB interviewed three managing directors of SBI -- A K Tewari and Vinay Tonse being the other two for the post.

The board cited overall experience and the extant parameters for their recommendation.

While FSIB has made its recommendation, the appointment will be made by the government.

The present SBI chairman Dinesh Kumar Khara's tenure will end on August 28 upon attaining the age of 63. The government had extended Khara's term last year.

Setty joined the SBI board as managing director in January 2020 to head the bank's retail and digital banking portfolio.

Prior to his promotion, he was deputy MD looking after the stressed assets vertical -- an area, which he was exposed to in his village since childhood.

On Setty's priorities at the corner office, senior SBI executives said growing business, especially raising liabilities and maintaining asset quality, could be his key tasks.

Keeping technology and digital backbone up and running, its protection and continuous upgradation have become extremely crucial responsibilities as it is now considered basic infrastructure, SBI officials said.

He has been looking after technology functions for many years.

Critical insights from this exposure will be an advantage for him at the corner office. This comes as the revamped digital banking app YONO is expected to be rolled out in the second quarter.

He is set to start his innings on a healthy financial and credit base. And, the task of maintaining and improving asset quality of retail, agriculture and small and medium enterprise portfolio would call for his attention.

His initial days in office are likely to coincide with the change in interest rate cycle to the easing phase. He would need to be mindful about pressure on net interest margins as a substantial portion of the loan portfolio is linked to external benchmarks like policy repo rate.

The transmission of repo rate reduction would be immediate and could impact the interest income, said two executives.

While SBI has an unparalleled network in semi-urban and rural areas, private banks have scaled up via branches and business correspondents to grab market share. He will certainly be watched for the bank's performance on this count.

SBI has a market share of 22.55 per cent in deposits, and 19.06 per cent in loans in India's banking sector, as on March 31, 2024.

As chairman, he may have to deal with any complexities from the electoral bonds issue and the Supreme Court verdict.

This aspect is distinct from the bank's core activity. Hence, it may not impact SBI's business, one investment banker said.