Tag: Rajnish Kumar

Bankers shocked over ‘high-handed’ move, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Former State Bank of India (SBI) chairman Pratip Chaudhuri was arrested by the Rajasthan police on Monday on complaints from a loan defaulter sending shock waves in the banking industry that was just limping back to normalcy after years of fear of being implicated criminally on trumped up charges.

There was reportedly no notice or formal summons in a decade-old soured-loan case which has shaken the banking sector, stoking concerns the incident could delay decision making in multi-billion-dollar recovery initiatives of several lenders.

Former SBI chairman Rajnish Kumar termed his predecessor’s arrest as extremely unfortunate and a case of high handedness. “Prima facie, it seems to be a case of misrepresentation of facts and singling out of an individual, who held a high position, to seek publicity,” Kumar told ET. “In the process, the dignity of an individual has not been given any consideration. It needs to be looked into whether due process of law has been followed.”

Account Acquired by an NBFC in 2017
Chaudhuri was arrested from his Delhi residence by the Rajasthan police and taken to Jaisalmer on Monday. His subsequent bail application was rejected by the local magistrate. The case refers to the ‘Garh Rajwada’ hotel project in Jaisalmer, financed by SBI in 2007.

  • Chaudhuri was arrested from his Delhi residence by Rajasthan police, taken to Jaisalmer on Monday
  • Local magistrate rejected his bail plea
  • Case refers to a Jaisalmer hotel project, financed by SBI in 2007 Account became an NPA in 2010
  • Chaudhuri retired in 2013 NPA was sold to an ARC in 2014
  • Bank not summoned or asked for its views in case

Since the project was not completed for three years and a key promoter passed away in April 2010, the account slipped into the non-performing asset (NPA) category in June 2010.

As the country’s biggest mass lender didn’t succeed in reviving the project, SBI sold the loans to the Alchemist Asset Reconstruction Co (ARC) in March 2014.

To be sure, it is unclear whether Chadhuri was arrested because of his role as SBI chairman or because he was later chairman of Alchemist ARC, which bought the assets from the bank. Police authorities in Rajasthan couldn’t immediately be reached for their comments.

Ironically, bankers said Chaudhuri retired from the bank six months before the sale of loans, in September 2013.

In a statement, SBI said the sale to Alchemist ARC was done through a laid-down process. Further, the account was taken to the bankruptcy court and was acquired by an NBFC in December 2017.

‘No Legal Basis’

The arrest, without any due notice or summons neither to the bank nor Chaudhuri, has not gone down well with current and former SBI executives. Former SBI deputy managing director Sunil Srivastava took to Twitter to express his displeasure. “Frankly, without notice and without summons, how can police from another state arrest someone in Delhi? Where is the due process of law? Absolutely pathetic. Is the system being gamed again by defaulters despite all efforts by Modi govt; time for overhaul of judicial processes to improve transparency and introduce accountability,” Srivastava wrote on the social media platform.

Interestingly, Alchemist ARC promoter Alok Dhir was not arrested and his mobile phone was switched off when ET tried to reach him. “Whatever it is, it does not have a logical or legal basis,” the chief of a large public sector bank said, on the condition of anonymity. “There have been numerous court orders, including from the Supreme Court, that directors are not liable for the faults or crimes of a company management. Some lower level judicial and police officers who have no clue of how banking works take these high-handed decisions to please higher-ups. This must stop.”

‘SBI not Party to Case’

SBI said despite the case involving its loan account, it was neither summoned nor asked for its side of the story.

“It transpires now that the borrower had initially filed an FIR with the state police against the sale of the asset to the ARC. Aggrieved against the negative closure report filed by police authorities, the borrower had filed a ‘protest petition’ before the CJM court,” SBI said in a statement. “Incidentally, SBI was not made a party to this case. All the directors of that ARC, including Mr Chaudhuri who joined their board in Oct 2014, have been named in the said case. Incidentally, Mr Chaudhuri retired from the bank’s service in Sep 2013.”

The bank said it has now accessed copies of the proceedings that show the court was not briefed correctly on the sequence of events.

Bank Offers Cooperation
“In as much as SBI was not a party to this case, there was no occasion for the views of SBI being heard as part of these proceedings,” the bank said. “SBI would like to reiterate that all due processes were followed while making the said sale to ARC. The bank has already offered its cooperation to the law enforcement and judicial authorities and will provide further information, if any, that may be called for from their side.”

Bankers said lessons have not been learnt despite recent judicial and police overreaches. They were referring to the dramatic June 2018 arrest of the Bank of Maharashtra CEO Ravindra Prabhakar Marathe, and executive director Rajendra Kumar Gupta. The police subsequently filed a closure report due to lack of evidence and Marathe and Gupta were reinstated.

“The point is that the police were not punished. There is no punishment for wrongful cases and judgements that can destroy careers. Law enforcement agencies are not acting with responsibility and this will have economic repercussions,” said the bank CEO cited above.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

‘RBI should’ve acted on YES Bank 5 months earlier’, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


MUMBAI: Former State Bank of India chairman Rajnish Kumar has said in his book that the Reserve Bank of India should have sacked the Yes Bank board five months earlier in November 2019 as the bank was already losing deposits and defaulting on reserve requirements.

In his book, ‘The Custodian of Trust’, the former SBI chairman has provided some behind-the-scenes glimpses of what went into resolving something that appeared as a Lehman Brothers moment for India. It was during his tenure that the financial sector was hit by the triple failure of IL&FS, DHFL and Yes Bank.

Giving a hint of the workings of Yes Bank, Kumar reveals how the private lender stepped in to help GVK attain financial closure for its Navi Mumbai project. The Rana Kapoor-promoted bank had charged a high upfront fee even when SBI — which was several times bigger and facing pressure from various authorities — was reluctant given the group’s stressed situation. He has also questioned the delay in deciding on the reappointment of Kapoor, which left the RBI with no choice but to offer a three-month extension up to January for Kapoor.

Pointing out that Yes Bank’s plan to raise capital was not well thought out and the board had not applied its mind to a revival plan, Kumar said, “The action that the RBI took as late as March 2020 could probably have been taken as early as November 2019. But everyone is wiser in retrospect.”

Kumar has also dwelt extensively on the Jet Airways collapse. According to him, the SBI board was wary of backing Kumar on a resolution plan for the airline without a letter of comfort from the finance or aviation ministries. The airline’s fate was finally sealed after Etihad rejected the resolution plan.

According to Kumar, the negotiations with Etihad had turned ugly with both Jet promoter Naresh Goyal and SBI coming around to the view that Etihad was only interested in the Jet Privilege programme where it held stake and wanted to open this to other airlines. When this was mentioned to Etihad CEO Tony Douglas in a meeting by SBI MD Arijit Basu, the Etihad chief moved menacingly towards Basu and was stopped by Kumar’s intervention.

Kumar, whose tenure coincided with the great bad loan clean-up in Indian banks, also exposes some bitterness in banks taking the fall for a collective failure among stakeholders. “Attributing non-performing loans entirely to crony capitalism or zombie lending only highlights the lack of an in-depth analysis of the situation, in turn causing resentment among bankers,” he said.

The book, which is published by Penguin, is dedicated to the late Arun Jaitley who Kumar says guided him in crucial decisions. It was Jaitley who supported SBI’s decision to bite the bullet and provide for bad loans with a wry statement in Hindi: “Aur kya kar sakte hain, Rajnishji? (What else can be done?)”

Another interesting fact is that the reclusive former governor Urjit Patel, who was earlier on the SBI board, met Kumar only once during his tenure and closed the doors for all communication with banks.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Andhra appoints former SBI chief Rajnish Kumar as economic advisor, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Andhra Pradesh government has appointed Rajnish Kumar as its economic advisor. A former SBI chairman, Rajnish Kumar’s tenure in the cabinet rank position is for two years.

The appointment comes amid the growing concerns over the state’s financial situation which has been badly hit by the Covid pandemic, even as the opposition has been critical over the sops and freebies being distributed by the Y.S. Jagan Mohan Reddy-led state government.

Rajnish Kumar’s appointment on Monday is expected to help the state government steer through the financially tough juncture.

Rajnish Kumar who had retired as SBI chairman in October 2006, is an independent non-executive director at the HongKong and Shanghai Banking Corporation.

Follow and connect with us on , Facebook, Linkedin



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

HSBC Asia appoints former SBI Chairman Rajnish Kumar as an Independent Director, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Hongkong and Shanghai Banking Corporation Ltd (HSBC) on Monday announced the appointment of Rajnish Kumar as an Independent Non-Executive Director. Kumar will also be a member of The Hongkong and Shanghai Banking Corporation Limited‘s Audit Committee and Risk Committee of its Asian operations.

The Indian operation is a branch of this Asian entity. HSBC is also listed in the UK as a separate entity called HSBC Plc. Rajnish Kumar retired in October 2020 after a 40-year career at the SBI. His international tenure included stints at SBI’s UK and Canada operations.

“Rajnish‘s depth and breadth of experience across India‘s financial industry will be an invaluable addition to the Board of the Group‘s flagship Asian entity as HSBC directs its focus towards the region. The opportunities presented by its 1.4 billion population, 18 million non-resident Indians and 40,000 MNCs make India a key component of HSBC‘s growth strategy” said Peter Wong, Chairman of the Board, HSBC.

Rajnish Kumar was formerly Chairman of the State Bank of India (SBI), until he retired in October 2020 following a distinguished 40-year career with the SBI. In addition to his extensive background with regulatory authorities, investors and businesses in India, Kumar has strong experience of global business and financial markets from his work with the SBI in the UK and Canada. During his tenure as Chairman of the SBI, he also led the strengthening of the bank‘s digital banking platform.

He is also currently a director of India’s Lighthouse Communities Foundation, an independent director of Larsen & Toubro Infotech, a senior advisor of Baring Private Equity Asia Pte Ltd in Singapore and an advisor of Kotak Investment Advisors Ltd in Mumbai.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

It’s only been five years since IBC, everyone involved is learning new things, give it time, says former SBI Chairman Rajnish Kumar

Banking & Finance

[ad_1]

Read More/Less


Tamanna Inamdar talks to Former SBI Chairman Rajnish Kumar about the IBC and its many plus points, while also bringing up the argument of big companies getting haircuts from banks, while the common man’s defaults are not written away. Kumar talks of giving the IBC time to flourish. Edited excerpts:

So, Harsh Goenka tweeted asking why businesses get 80-90% haircuts on their loans, but no banker will afford the common man the same cut on a home/personal loan. What are your thoughts on the matter?
I’ve not read what Harsh has said, but as far as the process is concerned, IBC was introduced in November 2016; before that, the remedies available to bankers with regards to sick industries and companies were BIFR – where the existing promoters continue to get a case on the matter for years and years with no outcome – or there was DRT SARFAESI, which was not a pleasant experience for bankers.

In any capitalist society, the exit mechanism for inefficient firms is only through bankruptcy; all countries have a form of this law and India bought this in only five years ago. These five years have been a learning experience — for resolution professionals, NCLT themselves, members, committee of creditors, lenders and borrowers.

So, when we talk about IBC, its success cannot be measured by what you recover. If success has to be determined on that basis, then the kind of paradigm shift it has brought in the debtor-creditor relationship should be the benchmark. Till this law came, the promoter or a defaulty promoter would tell the banker on their face that it is your NPA, your problem, you resolve it. But that’s not the case anymore.

Two, as far as recovery is concerned, it depends on the buyers. What value they see in the purchase; why did we see such a fierce fight for Binani Cement? Why did we see one recently, between Piramal and Oaktree for Devang Housing? Bidding started from Rs 12,000 odd crores it went as high as Rs 35,000 crore. In the service sector, what do you buy? In an airline, they don’t own aircraft, they don’t have slots in the airport, it is a service industry.

So, something is better than nothing? Earlier there was this evergreening going on and bad loans were piling up, at least this put a stop to that culture?
I’m not saying something is better than nothing, it is not the case when lenders lose money; they also feel bad, but the question is that for the buyers it is a transparent process. It is a bidding process, EoIs are invited, it is a fully governed process. If there is no buyer for any asset, what do you do? For example, take the global aviation sector, look at bankruptcies and what they get. Five cents against the dollar? So it’s very common.

In the services industry asset recovery/ resolution will be very difficult. If you have assets – like in a steel plant – the job becomes easier. There were very good plants, with identical debts — Essar Steel, Bhushan Power and Steel — but, recovery differed because the buyer saw more value in Essar, which was a port-based plant, rather than Bhushan Steel. And they saw more value in Bhushan Steel than Bhushan Power and Steel, so it is a process and I think we should not run down or decide on the process in this manner. It has only been five years; there are certain deficiencies in the process but the success of the law or the process cannot be determined by making it into a recovery efficiency question, it is not. It is a resolution mechanism and itd intent is to preserve the value of the enterprise and as far as promoters are concerned, if they’ve done something wrong,the agencies are there. The Enforcement Directorate has done a fantastic job in the three cases you were mentioning.

So, enterprise and promoters are different and that is recognised in the case of IBC lenders; creditors are concerned with preserving the value of the enterprise to any extent possible and if a promoter has done something wrong, there are enough laws to deal with it.

In financial terms, it is completely incorrect to compare a business loan to a personal loan and to other categories, but I think we must address this general perception that if a business fails then the liability and pain is much less and the bank can still walk away with 60-70% of a haircut and call it a success, but if there is an inability to return a loan — especially in the context of a pandemic — taken by an individual creditor, it becomes a whole different ballgame. Can you explain to us why you feel that that’s the wrong way to look at it?
See even in the case of retail creditors – like agriculture – how much loan has been paid back? Because it is not economically viabl, not because farmers don’t want to pay. Because they don’t have sufficient earnings to service debt, so it is the same situation, more or less. Periodically, governments come and provide relief, manage debt.

About housing loans you can say that because people put their house up as security or they put gold as security, lenders obviously like assets. If a company’s assets are mortgaged, then the haircut is not as high as what you’ve mentioned. When a haircut or the losses to lenders are more, then those assets lose their value. For example, take a power plant; today, if you want to setup a power plant, it will cost – for a thermal power plant – anywhere between Rs 7.5 to 8 crore. But, if the power plant is incomplete or if there are no coal linkages or if there are no PPAs or something happens and it goes through the NCLT process, then you cannot recover the same amount of money.

So, it is ultimately dependant on the the hard assets, the debt, the planted machinery; there are valuation methodologies so you cannot equate the two loans. A good bank gets a housing loan for 6.75% which is equal to a AAA so there is no discrimination in that sense, because it is presumed that the probability of default and enforcement action in case of a secured loan will be very low. Accordingly, it is priced also.

Banking is not such a simple thing, there is risk, there is a risk reward matrix; that’s why there are laws around the process and companies are managed so that comparison is absolutely invalid. If we set up a limited liability company, then there will be no company left in this country that also we should understand.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Raghuram Rajan says privatisation is a blunder; Rajnish Kumar cites failures in private banks, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


As the government speeds up on privatisation of public sector entities, industry mavens are not sure about the move. Former RBI chairman Raghuram Rajan spoke against privatisation while Rajnish Kumar former chairman of SBI has said that there are failures in private banks as well.

The government has made it clear that it doesn’t want to have more than five entities in any business. That’s a strategic decision that the government has taken recently. But the government has been talking about reducing its stake in PSBs for a long time. It merged 10 PSBs into 4. There are many recommendations for the government to reduce its stake in banks to only 51%. The idea is this will give enough funds to the government and the banks will also become more professionalised. But while the government is thinking of divesting its stake, Raghuram Rajan believes that it has not benefited the developed countries like the US.

“Time has come to recognise the crucial sectors of the country to be preserved. The Indian government is trying hard to sell the public sector banks to corporate hands which is a grave concern for an economy like India. Time is to understand Privatization is a blunder,” Raghuram Rajan, former Governor RBI and IMF Chief Economist, tweeted.

Rajan was replying to US President Joe Biden’s tweet on the divestment of government companies.

The developed countries like the US too are finding it difficult to create jobs after disinvesting heavily. Biden tweeted about his focus on creating government jobs.

“After decades of disinvestment, our roads, bridges, and water systems are crumbling. We must pass the American Jobs Plan. Together, we will rebuild our country’s infrastructure and create millions of good-paying union jobs in the process,”

This is not the first time Rajan made his viewpoint clear on privatisation. In an interview with PTI in March, he said, “I think it would be a colossal mistake to sell the banks to industrial houses. It will also be politically infeasible to sell any decent-sized bank to foreign banks,”

Bank employees’ associations and federations are already opposing the bank privatisation decision and held the 3-4 day strike very recently.

In an interaction with ETBFSI, Rajnish Kumar, former Chairman of SBI presented a different view to this discussion. He said if the government’s agenda is to bring governance then the government should change the ownership. “If the government wants to improve only the governance they can shift the ownership of the PSBs to RBI. And the issue would have been resolved. RBI would become the sole regulator and banks would achieve similar results,” said Kumar.

He also added, “The major issue is how long should the government capitalise the PSBs. And the government’s policy is also that it doesn’t want more than four entities in non-strategic sectors. There can be a question whether private banks perform better? But there is not an easy answer to this because there are failures in private banks as well.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Rajnish Kumar, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Vijay Mallya, former Chairman, UB Group and Kingfisher Airlines, has been claiming on Twitter that he is ready to make a one-time settlement to the lenders. But in reality, he has not made any official communication to them.

“Till the time I was the chairman, there was no communication received from Vijay Mallya about any such offer,” said, Rajnish Kumar, Former Chairman, SBI.

Mallya fled India in 2016 when the lenders and investigative agencies went heavily against him. He is now living in London. His total dues are more than Rs 7,000 crore and lenders are in the process of recovering from his assets. Recently, the PMLA court has approved the sale of his assets. Lenders are confident that there will be a significant recovery from his accounts.

“Lenders have security. Irrespective of what Vijay Mallya does, bankers have the security to recover their dues from his assets. And that security is very good and valuable. Recently, the PMLA court has approved the sale of his assets. In Mallya’s case, whatever is the narrative, whatever be his mistakes. I am sure the lender will recover better than many other stressed assets,”Kumar said.

This is the second time that Mallya has been proved wrong on his statements. Earlier too, Mallya had claimed that he had met former Finance Minister Arun Jaitley regarding an offer to settle his dues. But Jaitley had denied any such talks with him.

India has been trying hard to catch hold of Vijay Mallya who is living in London. There is already an extradition case going on and he is living on bail. After the PMLA courts approval to sell his assets, he said on Twitter, “Does nobody consider that my assets far in excess of Kingfisher Airlines borrowings have been attached by ED and the several of my settlement offers to repay 100%? Where is the cheating or fraud?”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Former SBI chairman Rajnish Kumar joins Baring as adviser, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Rajnish Kumar, former chairman of State Bank of India, has taken up an advisory role with Baring Private Equity Partners India four months after his retirement from the country’s largest lender.

“Yes, I have joined Baring India,” Kumar told ET. “It’s an advisory role, I will not be on the board.” He did not elaborate on his likely role at the PE firm. People familiar with the development said Kumar will advise Baring on investments in India and Southeast Asia.

He follows the footsteps of Aditya Puri, former managing director of HDFC Bank, who recently joined global investment firm the Carlyle group as a senior advisor to guide them on Asia investments.

Baring Private Equity (Asia), one of the largest global alternative investment firms, and its existing credit funds have made 21 investments across mid-sized companies and deployed around $310 million. Baring, known for its big-ticket buyouts, manages around $21 billion across Asia.

Kumar, who comes with a rich experience of 40 years, is expected to advise the Baring team on scouting portfolio investments and likely opportunities, and help improve businesses at portfolio companies.

Kumar, who retired from SBI in October last year, is credited to have made the lender much more resilient to absorb asset quality shocks, completed the mega merger of seven banks with SBI, and made the public sector lender an all-rounded digitally savvy bank.

Under Rajnish Kumar, SBI’s bad loans improved by a third with gross bad loans at Rs 1.29 lakh crore in the first quarter of the current financial year against Rs 1.86 lakh crore in the second quarter of the fiscal year 2018. During the same period, the bank’s gross non-performing asset ratio improved to 5.44% from 9.97%.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,