India's largest bank was blindsided by Indian Prime Minister Narendra Modi's demonetization drive with daily business severely disrupted, the head of the lender said, but the outcome sees economy returning to "normalcy," and a surge in deposits from the cash swap has given more room on lending.
"When we found out that 86 percent of the currency had been demonetized, … the sheer size of the task was intimidating. On top of that, remember we had no arrangements ahead of time," Arundhati Bhattacharya, chairwoman of the State Bank of India (SBI), told CNBC's "Managing Asia."
On Nov. 8 last year, India implemented a shock currency swap that required all 500 and 1,000 rupee notes be exchanged for new tender in 500 and 2,000 rupee denominations by the end of 2016. Nearly all transactions were handled through the banking system to meet the deadline.
That put the spotlight on state-owned SBI as the top lender and with a footprint that stands to become even larger if it succeeds in a planned merger with five of its associate banks.