In recent times, huge accumulation of losses to public sector banks in India has caused widespread public concern. In February 2014, the Chairperson and Managing Director of the United Bank of India (UBI) put in her papers amidst a massive ongoing crisis of the bank in the form of a net loss of 1,683 cr in the first nine months of the financial year 2013-14. It was a case of chronic mismanagement and lack of vision. Despite being headless, the bank managed a turnaround in the January-March period with a quarterly net profit of 470 cr. This paper undertakes a detailed qualitative, strategic and financial examination of the events and structures that led to UBI’s huge accumulation of losses and then, by adopting the Resource-Based View (RBV) theoretical framework (Barney et al., 2001), attempts to come up with workable recommendations on how to make it a viable business again. Key competencies of the bank have been identified by the VRIO method and detailed solutions are offered to rejuvenate the bank.

One crucial consideration while analyzing the strategy and performance of state-sponsored or public sector banks should be Benedikter’s (2011) definition of social banks, i.e., “banks with a conscience”. He explains the difference between mainstream banks and social banks thus: the former are in most cases focused entirely on the profit maximization principle, whereas the latter execute the triple principles of “profit, people and planet”. As per the 2011 census, only 58.7% of households in India are availing banking facilities. There is therefore a huge potential in the rural markets in India, which is yet to be explored by many major banks.

The Indian banking industry is characterized by a fair number of peculiarities. It is mature in terms of supply, product breadth and reach with ample scope for expansion. In asset quality and capital adequacy dimensions, Indian banks are generally considered clean, with strong and transparent balance sheets compared to banks in similar economies in this region. From 1992 onwards, the industry experienced sustained productivity growth, driven mainly by technological progress.