Note. Chairman Madam visits Hannover to attend Messe event and SBI Germany s jubilee event

Transcription

1 Note Chairman Madam visits Hannover to attend Messe event and SBI Germany s jubilee event

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3 Interview of Chairman madam in Handelsblatt

4 I am a die-hard optimist

5 The head of India s largest bank on growth, currency wars and female managers. One, who interacts with Arundhati Bhattacharya, experiences a reserved, cool-headed, almost modest manager. But someone, who has managed to take up tradition-steeped male bastions: The State Bank of India. Mrs. Bhattacharya, you are the first woman on the top of India s largest bank. But there are also some other female heads of banks in India, many more as compared to Germany. Is India a good country for female bankers? Yes, I think so. At some point we had eleven women at the top of Indian financial institutions, in government owned banks, private banks and foreign banks like HSBC, Bank of America or JP Morgan. Women have had very good growth in the Indian financial sector. People often ask me why? Exactly, why is it so? It s difficult for me to answer this. I would explain it this way: In 1969, the Indian banks were nationalized. As a result, there was an explosion of the financial sector. Till then, women worked primarily in the fields of education and health, but in the 70s and 80s, there were suddenly many opportunities for women in the banking sector. I myself joined State Bank of India in It took us quite some time till we reached the top. The difference with the other Indian industries, in which women are rarely found in the top management, is striking. Only Japan has an even worse ratio. Yes, you are right. But it is improving. Now, also an oil company is being led by a woman. And in other professions, the boundaries are breaking. Since recently, every large company must have at least one woman in the board, otherwise it risks a heavy penalty. By and large, the corporate groups have put that into practice. Some are even trying to get more than one woman in the board - and can see the benefits.

6 In Germany, we also have a women's quota in supervisory boards from the coming year. What do you think of it? You know what, when you try something for a long time and simply nothing happens, then such active supportive measure are sometimes necessary for a limited period of time. It does not have to stay forever. After the start, people will themselves see and recognize the positive dividends it pays. With Narendra Modi, India is now governed by a business-friendly Prime Minister, who pursues ambitious growth targets. Does it help your business? Definitely. It is very important that the economy has a strong growth. In India, every year, ten million young workforces enter the market. In the age of communication, many of them are very well informed, and hence their expectations and ambitions are equally high. We have no choice but to create enough new jobs. In order to boost growth, the economy would also need more bank loans. But the Indian institutions are suffering from many bad debts in their books. This time, the problem of bad loans looks a little different than in the earlier cycles. It mainly concerns infrastructure investments. Thus, projects, which are existing and productive, are facing bad debts. At present, power plants and roads are perhaps not adequately functioning at full capacity to serve all the loans, but this would change once the growth accelerates. Despite their problems, will the Indian banks be in a position to support the growth with higher loans? I assume so. But I also expect that we will see much more activities in the capital markets in this economic cycle, for example, through the issue of shares. The banks are actually prepared to give credits, but they also ask for an adequate hedge by equity capital. We think that also foreign capital could play an important role here. The government is very interested in improving the general conditions for international investors.

7 In the Indian financial industry, problems in the public sector, and there especially in case of smaller institutions, seem to be particularly pronounced. Do you expect acquisitions in this area? Yes, we will experience a consolidation in the next three to four years. This makes sense because larger banks are easier to manage and easier to regulate. However, the government does not wish to exert compulsion but hopes that the banks will themselves recognize the advantages of merger. Will your institution play an active role in this? I don t think that it is expected from us that we will be taking over other banks because we already are, by far, the largest state-owned bank. I think that the government is not interested in creating an even larger bank, but wants to rather have more influential institutions, in order to ensure adequate competition. How does it look outside your domestic market? Does State Bank of India have global ambitions? Firstly, we are trying to expand our business in our neighboring countries, for example, in Bangladesh, Nepal and Sri Lanka. Also in South America and Africa, we want to become more active. And Germany, how important is this market for you? Many Indian companies are already present in Germany. Moreover, we have found that there are a whole lot of family managed companies in Europe, not only in Germany, that have problems in financing their growth or finding a successor. In many cases, a partnership with an Indian company could help. Does that mean that German SMEs will become targets of takeover for Indian companies? Yes, maybe, but it need not immediately be a takeover, trust can be established first through working together. If you look at the global economy, is the development of exchange rates a cause of concern for you? Do you fear a currency war?

8 No, not much. In 2013, India was perceived as a part of the "Club of five wavering candidates". We have definitely left this club. India has currency reserves of USD 340 billion. Moreover, the Central Bank has organized a funding line of further USD 50 billion with Japan. And finally, the current account deficit of India has reduced considerably. Is it sufficient to absorb possible shocks? During the last crisis, we have seen that the Indians living in foreign countries are willing to provide the country with foreign currencies against a little higher interest rate. At that time, USD 30 billion was collected within a month. Irrespective of how the major rating agencies assess India, the country always has the best rating of creditworthiness AAA for the Indians living abroad. Therefore, I do not think that we are particularly vulnerable. At present, there are discussions worldwide on the establishment of the Asian Infrastructure Bank AIIB and on the competition that China sets against the international Financial Regulations with this, to the annoyance of USA, for example. What is your opinion on this? I think, the more such institutions we have, within a certain framework, the better it is. Asia still has serious shortcoming in the area of infrastructure. An Infrastructure Bank in Asia would perhaps understand the realities and priorities of the region a little better. I cannot see anything negative in it. I believe, whatever AIIB does, it will be doing it in addition to what is done by the existing institutions and not restrict their work. According to estimates by the International Monetary Fund, in 2015 India will have a strong growth of 7.5% like no other large economy. From this perspective, how does the view on Europe look, with its growth problems and endless debates on Euro? Europe is our biggest market. We can feel every development there. On a whole, Europe has excellent technology. What is lacking in Europe, is the demand. We have the demand, whereas the level of technology could be improved. If we work together even closer, it will be profitable for both the

9 sides. Europe is important for us. We hope that everything would take a turn for the better. Are you being optimistic there? Yes, I am a die-hard optimist (laughs). You have to be that in India. Mrs. Bhattacharya, thank you very much for the interview.