Ms Bhattacharya, 60, was due to complete her current three-year term on Oct. 6. The Indian government, which owns the majority of SBI, has extended her term for one year, effective on Oct. 7, the bank said in a filing on Saturday.
Ms Bhattacharya is the first woman to lead the two-century old bank after climbing up through its ranks since joining in 1977.
She has won strong praise from investors at a time when state-run banks are being pressed by the central bank to clean up Rs 8 lakh crore in soured loans that had crimped credit growth.
Ms Bhattacharya was named in the Forbes list of the world's 100 most powerful women, and there had been speculation that she was a candidate to replace Raghuram Rajan as Reserve Bank of India Governor, although that ultimately went to insider Urjit Patel.
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