Rajnish Kumar interview| When Rakesh Jhunjhunwala said he didn't trust SBI's books

Ace investor Rakesh Jhunjhunwala.

Big bull Rakesh Jhunjhunwala once didn’t trust State Bank of India books and even refused to buy its shares but 18 months later, he became an investor, former chairman of the public sector bank Rajnish Kumar told Moneycontrol, as he recalled how the public sector bank proved skeptics wrong.

“I called him (Rakesh Jhunjhunwala) to my office and asked why are you not an investor in SBI. And what did he tell me? He said I don’t trust your books. I met him one and half years later and asked, are you an investor now? He said, 'yes sir. I’m an investor now',” Kumar said in an exclusive chat on January 5 as part of Moneycontrol’s Banking Central interview series.

Kumar also recalled his first analyst meeting after taking over as SBI Chairman. “My first question to them was how they valued Dewan housing at one lakh crore. The market capitalisation of SBI at that time was Rs 1,60,000 crore or Rs 1,80,000 crore," Kumar said.

"Even if your logic is that their (DHFL’s) housing fiancé portfolio is one lakh crore, then by that logic SBI’s market should have been Rs 3 lakh crore,” Kumar said.

The housing finance company later plunged into a crisis due to alleged irregularities by its promoters. The company was acquired by the Piramal group following a bankruptcy process.

Also read: Rajnish Kumar Interview | Action must against bankers for quid pro quo deals but can't blame only them for NPAs

The former SBI chairman went on to say that the share price solely does not reflect a company’s overall operational performance.

“Operations in large corporations and performance of the bank solely can’t be looked at from the share price,” Kumar said. He said markets are rational and sometimes need convincing.

Share price is not the only metric

“Any corporation is just not to create or enhance the value of its share in the short term. One and a half years after Jhunjhunwala said he does not trust our books, he became an investor in SBI

Any informed person understands that corporations are not built for quarterly performance. They are built for sustainability,” Kumar said.

On December 16, Ashneer Grover, who helmed BharatPe before an acrimonious exit, had said bringing Kumar on board was his "biggest hiring mistake" and went on to cite the fall in SBI share prices under his watch.

"Rajnish Kumar was my biggest hiring mistake. Not only because of what transpired - but bcoz I overlooked data. Under Rajnish as CMD, SBI stock tanked 25% in 3 yrs (₹257 —> ₹192). That’s $8 Bn of value destruction. After he left it went to ₹570 (up 200%). Data is never dogla! (sic)," Grover had tweeted.

Kumar refused to react to the remarks and told Moneycontrol he won’t stoop to Grover’s level.