Former State Bank of India (SBI) Chairman Rajnish Kumar had to secure a No Objection Certificate (NoC) from the central government before taking up his next assignment at the Kotak Mahindra Group just four months after he exited the top post of country's largest lender.
This is because the rules prohibit retired PSU bank chairmen from joining other companies within a year of retirement. “An NoC from the Government of India was needed, which I have taken (Sic),” Rajnish Kumar told Moneycontrol.
Kotak Investment Advisors (KIAL) on February 12 announced that Kumar would be the exclusive advisor for its $1 billion Special Situation Fund. KIAL is a wholly-owned subsidiary of Kotak Mahindra Bank Limited, a competitor to SBI, that focuses on the Alternate Assets business of the Group. It was set up in early 2005 to focus on the Group’s alternate assets.
The former SBI chairman had taken up an advisory role with Baring Private Equity Partners India earlier this month. He retired from SBI in October 2020 and has nearly 40 years of experience. Kumar, who joined SBI as a Probationary Officer in 1980, is credited with the mega-merger of seven banks with India’s largest lender.
KIAL had recently announced that it has achieved closure of its new Real Estate Fund worth around $380 million (Rs 2,770 crore approximately), which will target a host of real estate financing opportunities across key cities in the country.
Kumar is not the first SBI Chairman joining private organisations. His predecessor at SBI, Arundhati Bhattacharya, is the India CEO of US Cloud-based service provider, Salesforce.com Inc. Bhattacharya joined the post in March 2020. Most other former SBI Chairmen too have taken up either advisory roles or directorship in different companies.
Also Read: Banking Central: Do India’s top bankers, regulators really retire?
During Kumar's tenure, SBI moved ahead with its digital drive through SBI’s YONO platform and consolidated its troubled corporate accounts. Kumar’s biggest challenge during his term was managing the bailout of Yes Bank in March this year. Yes Bank, ravaged by frauds by the previous management and critical financial position, was in ICU when Kumar got the call to lead the rescue. The bailout team comprised half of the banking industry and was guided by a time-bound plan framed by the banking regulator in consultation with the government.
“Yes Bank will not be allowed to fail. Some solution will come,” Kumar once said when there was still uncertainty over the bank’s future. He moved swiftly and spearheaded the bailout, which included appointing a former SBI executive Prashant Kumar, as the administrator of the bank. Rajnish Kumar received praise from all quarters for smoothly conducting the whole process and handing over Yes Bank to a safer management.
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