Regulations, tighter corporate governance will lead to better performance as we close the year: SBI’s Dinesh Kumar Khara at HTLS 2020

State Bank of India chairman Dinesh Kumar Khara on Thursday said that he expected a significantly lower contraction between 8 and 9 per cent as against the Reserve Bank’s earlier forecast of 9 and a half per cent for the economy as the country moves towards the end of 2020. The contraction in Q1, earlier this year had been nearly 24 per cent.

Indicating that the systematic unlocking of activities across India in a post-Covid-19 scenario had led to a revival of private investment, the veteran banker linked the slightly better performance of companies in the second quarter (Q2) to the Centre’s move to ‘Unlock’ after the lockdown imposed due to Covid-19.

“Regulations and tighter corporate governance will take care of corporates in the banking sector. Post-Unlock, economic activity revival has given hope to many across sectors. The second quarter has seen an improvement in the activity level. Demand revival itself has kick-started the economy. I expect if the current trend of revival continues the year-end performance of corporates will look significantly better,” the SBI veteran who barely a month ago took charge of India’s largest bank said.

“In the post-Covid-19 world, a lot of things have changed. How companies perform does not always depend on their ownership structures. Much of ownership issues and their solutions depend on corporate governance. The ownership structure does not matter if corporate governance is tight and contemporary,” Khara said.

There has been a significant demand for affordable housing and that in turn offers promise going forward. Maybe for deluxe real estate, the demand may not be as robust but in the affordable housing segment there is good demand, the SBI chairman said. “We at SBI think that there is a lot of capacity in the real estate sector year-on-year, and going forward we expect decent growth in the housing sector,” Khara elaborated.

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Dinesh Kumar Khara’s rise to the top office of India’s largest bank is an inspiring journey of a probationary officer, who joined the banking profession in 1984. Before being appointed as chairman of SBI for a period of three years in October, earlier this year, he was already serving as managing director of the bank. But like he pointed out, although he had been part of the top management earlier as well at SBI, “currently the buck stops at me,” Khara said.

One of the banker’s most recent accomplishments was the successful merger of SBI with its five associates and the Bharatiya Mahila Bank that put the country’s largest bank at par with top 50 banks globally.

The SBI chairman was speaking at a virtual session held on the third day of the 18th edition of the Hindustan Times Leadership Summit 2020, in conversation with Shereen Bhan, managing editor, CNBC TV18.