B Sriram steps down as SBI MD amidst IDBI Bank stake sale talks

B Sriram has resigned from the post of Managing Director at the State Bank of India (SBI), days after he was appointed to lead the IDBI Bank. He was named the Managing Director and Chief Executive Officer of the IDBI Bank last week for a period of three months. He replaced Mahesh Kumar Jain at the helm of IDBI Bank on June 22, who will join the Reserve Bank of India (RBI) in the capacity of Deputy Governor.

A PTI report said while quoting sources that his resignation from the board of SBI has been forwarded to Appointments Committee of the Cabinet (ACC) for approval. A decision on the matter will now be taken by a competent authority. The Committee is headed by Prime Minister Narendra Modi.

Coming to IDBI Bank, Sriram has his extensive experience to employ for saving the lender from its mounting bad loans. He is the longest-serving public sector bank MD, with experience in fields including stressed assets management. He was appointed as the MD (Corporate and Global Banking) in SBI since July 2014. He had been Managing Director of State Bank of Bikaner and Jaipur. Sriram joined SBI in 1981 as a Probationary Officer. During over three-decade-long career, he held several positions and also had a stint at SBI's Singapore office.

Sriram's appointment as MD and CEO of IDBI Bank comes at a time when government is mulling to sell its stake in the state-owned bank to Life Insurance Corporation of India (LIC). The insurance behemoth is planning to make a foray into the banking sector by acquiring majority stake in IDBI Bank as the deal is expected to provide business synergies despite the bank's NPA-laden balance sheet.

Despite posting healthy operating profit for consecutive quarters, IDBI Bank has seen its stressed assets mount to worrying levels. At the end of March quarter for FY18, the lender reported gross non-performing assets at Rs 55,600 crore. During the aforementioned quarter, the bank saw a net loss of Rs 5,663 crore.

Under the proposed deal with LIC, the government plans to decrease its stake in IDBI Bank to less than 50 per cent. Thus, if LIC acquires majority stake in IDBI Bank, the lender will see its status change to a private sector bank from a public sector one. LIC might turn IDBI Bank into a subsidiary, similar to its housing finance and mutual fund businesses.

Meanwhile, employees of the IDBI Bank have spoken against government's decision to sell its stake to LIC. The United Forum of IDBI Officers and Employees has written to the Finance Ministry, conveying their concerns over the impact LIC acquiring majority stake IDBI Bank will have on officers and working staff of the lender. In its letter, the employee union has called the deal veiled privatisation, as per a report by The Hindu Business Line.

The surge in NPAs registered by the bank is due to revised asset quality norms by the RBI and is not exclusive to IDBI Bank, the employee union was quoted as saying in the report, countering government's argument of mounting bad loans behind the stake sale.