Aditya Birla Group, L&T Finance others hire former PSB executives to boost bank licence prospects

MUMBAI: Banking licence aspirants are turning to former bureaucrats and chiefs of public sector banks to help them win licences and build their proposed banks from scratch. Aditya Birla Group, L&T Finance, BK Modi's Spice Group and brokerage houses Religare and India InfolineBSE -1.58 % have roped in half-a-dozen retired officials as advisors to their boards.

Executive search firms say the latest high-profile hires include Aditya Birla Group's appointment of former State Bank of IndiaBSE -0.18 % managing director Diwakar Gupta, who retired from the bank in August, Spice Group roping in DR Mehta, former chairman of the Securities and Exchange Board of India (Sebi), and Subhash C Kalia, former executive director of Union Bank of IndiaBSE -2.35 %, and L&T Finance appointing former bureaucrat PV Bhide as advisor.

Alok Mishra, former chairman and managing director of Bank of India, is said to be in talks with one of the banking aspirants and an announcement is likely soon, sources told ET. Such appointments will help the new banking aspirants to plan their positioning, operations and geographical presence. "Since these bankers are available only after retirement, organisations like ours seek their expertise to build the systems and processes with the wealth of knowledge they have gathered while running a largescale bank," said Nirmal Jain, chairman, India Infoline Group.
New banks will face various challenges. Non-banking finance companies that have applied for a banking
Alok Mishra, former chairman and managing director of Bank of India, is said to be in talks with one of the banking aspirants and an announcement is likely soon, sources said. licence will find the transition easier than corporate applicants as these NBFCs have already achieved scale and have relationship with the regulators. Corporates aspiring to start a bank will think through their strategy in an overbanked urban market and unbanked rural market.

That is where the expertise of these former bankers will help. They have experience in running profitable branches in rural areas where the ticket size of banking products is smaller and often expensive to service. These retired bank chiefs and government officials have a better understanding of the government's and central bank's social objectives and their advise can come in handy for companies aspiring for banking licenses.

"PSU banks have better rural reach and former PSU bankers can provide valuable guidance in integrating with the Reserve Bank's and the government's social and financial inclusion objectives," says Santrupt B Misra, director — group human resources and chief executive officer — carbon black, Aditya Birla Group. The Reserve Bank of India has made it clear it wants new banks to focus on financial inclusion and draw plans around their rural play. "They bring a holistic experience of all functions and have urban, rural and international experience, which is difficult to find in the private sector.

With the rural inclusion requirements for new banks, their perspective will be of high importance," said Puneet Pratap Singh, partner — financial services and head — north India at executive search firm Heidrick & Struggles. Designing products and pricing them accurately will be critical to the new banks to win business. This explains why Aditya Birla Group has roped in Diwakar Gupta, a strong retail hand who helped SBIBSE -0.18 % build its credit cards division, SBI Cards. Not only do these bankers bring strong retail experience, they have corporate relationships that can come handy when the banks are being set up.