Veterans Unpacked | Former AIG India country head Sunil Mehta: It is understood now that corporate reputation has to be earned and cannot be bought

I have never believed in “hanging up boots” as such, as we all have an obligation to make the most of our remaining healthy years.

After completing 18 inspiring years with Citibank in various roles and subsequently 13 years as Country Head of AIG India, I found myself engaged with undertakings which were completely out of my comfort zone.

In 2013, I created SPM Capital Advisers, originally with two partners – Mirabaud Securities, UK, and Percy Mistry of Oxford International. Our initial objective was to set up a domestic PE (private equity) fund for consolidation in the insurance industry. This meant a change in IRDA (Insurance Regulatory and Development Authority) regulations to enable PE funds to become investors and promoters. Intense engagement and persuasive arguments over two years with MoF (finance ministry) and IRDA paved the way for the first change in regulations in April 2015 for PE investment regulations and subsequently expanded in 2017. It was a very satisfying experience which also paved the way for the PE investment boom in the Indian insurance industry.

I will complete my duties later this week as chair of the YES Bank Board pursuant to the Reconstruction Scheme of March 2020. I do so with immense satisfaction. It has been a privilege to steer the bank back to financial and reputational stability from a very difficult situation.

Furthermore, I have been engaged with several not-for-profit organizations over the last two decades, which keeps me engaged and include the Action for Ability Development and Inclusion (AADI), formerly Spastics Society of North India, United Way of Mumbai and India, The Asia Society India Centre and US-India Strategic Partnership Forum (USISPF).

What keeps you busy now?

On the personal front, I enjoy gardening, I look after plants on my balcony. Travel, of course, is a source of inspiration as well as learning and a regular favourite to visit is Switzerland. Reading is an all-time pastime, and I'm reading the Curse of Cash right now.

Change in plans at Mirabaud and for Percy Mistry, facilitated my taking full ownership control of SPM Capital in 2015. Given market conditions and
challenges in raising a significant size PE Fund to achieve scale, I reinvented SPM Capital into a boutique consulting firm.

In addition, I was invited to the SBI Board and subsequently undertook the responsibility of chairman at PNB in 2017 and YES Bank in 2020. SBI, PNB and Yes Bank board/chair roles have been tremendous learning experiences and also an opportunity to make a difference. These board roles brought to fore a wide range of governance, risk, compliance and regulatory challenges facing the banking industry.

In 2017, I began the formation of PSB Chairman’s Forum (PCF), an informal committee where we shared our learnings as board chairs of public sector banks and delivered our recommendation for their governance reforms to MOF, RBI, BBB. It is heartening to see some of these under implementation.

In 2018, I was asked by the then minister of finance – Mr Piyush Goyal – to chair the Sashakt Committee for Resolution of Stressed Assets. Along with other committee members, including Rajnish Kumar, then chairman-SBI, P.B. Jayakumar, then MD-BOB and Venkat Nageswaran, then DMD-SBI, we presented our report to the government, and a large number of recommendations including the Inter-Creditor Agreement (ICA) have been implemented. It was a fascinating experience for the entire committee to take a deep-dive in the root cause of the stark stressed assets situation facing the banking industry at that time and deliver practical solutions for resolution and way forward. To achieve consensus and buy-in of all stakeholders on the way forward was a key accomplishment of this committee in a highly complex regulatory and market environment.

Looking back, can you tell us about three interesting events or anything that has stayed with you since?

My passion has been in building strong institutions, which also means protecting them during a serious crisis. Early in my career at Citi, we witnessed the 1992/93 Securities Scam besmirch the reputation of the banking sector. Citi was also asked to testify before the Joint Parliamentary Committee (JPC) – a first for it in India since its entry in 1902. Perhaps it was my premature grey hair, but the bank appointed me as the JPC Project Manager in addition to my Corporate Bank responsibilities for North India. The learnings from managing and protecting a vulnerable foreign institution during intense regulatory, media, internal and public scrutiny in a serious crisis were one landmark event.

Then in early 2000, I took over as the Country Head of AIG India at the request of the then AIG CEO – Hank Greenberg – with a clear mandate to build a formidable array of insurance and other businesses. The insurance sector had just opened for private and foreign participation. With a two-pager MOU executed between Hank and Ratan Tata in 1995, I started the arduous task of negotiating the term sheet and JV agreements between AIG and Tata to develop a partnership between the two behemoths. It was not easy. However, once accomplished, it was all going exceptionally well, until the September 2008 global financial crisis which triggered a change in control at AIG with the US government bailout package of over $182 billion. Now, AIG’s global situation had a deep impact on the India franchise which had been so assiduously built over eight years, into a conglomerate of ten major (verticals) such as life and general insurance, PE investments, home finance, and more with some 13,000-plus employees. My primary task of
retaining regulatory, customer, employee, business confidence among other challenges, while the parent in NY was dealing with an unparalleled systemic juggernaut that had hit all major financial players and AIG was at the forefront. This meant taking complete charge of what had to be done locally to protect the franchise and the employees who had joined the AIG India entities based on its global reputation and local business strategy. Abandoning ship during this period of crisis was not an option I chose. As country head, I was responsible for all employees who shared the same excitement of building a remarkable franchise. The Tata brand was a great saviour, and during the 2008-12 period, we successfully navigated an orderly sale of all AIG businesses in India except general insurance which continues to flourish as TATA AIG General Insurance. My biggest satisfaction was to find a new home for all our businesses, employees and preserve the reputation of AIG in India.

Thirdly, my role as chairman of Punjab National Bank and currently of the Reconstruction Board at YES Bank are other unforgettable events. The turnaround of YES Bank from its dire situation in 2020 to what it is today as a financially sound, stable banking institution with the highest governance, compliance, risk management standards and very strong growth prospects is a record of what an institution can achieve with integrity of purpose despite challenging circumstances. I am sure there will be a more comprehensive chronicle of the turnaround in due course. Suffice to say at this stage, it is a role model for a public private partnership towards salvaging an institution from a deep crisis. The reconstruction structure was well conceived and implemented, thanks to the Government, RBI and SBI and other private institutional investors who confirmed their confidence in the turnaround of YES. RBI reposed confidence in the Reconstruction Board and leadership by extending a short term facility of Rs 50,000 crore which the bank paid back within six months by September 2020, much to the relief of RBI. Customer confidence was reposed, thanks to the amazing job done by the bank’s 25,000-plus employees despite the Covid situation. Today, YES bank is back to growth. The stained reputation has been cleaned up and the bank is back to earning its credibility through one of the most elaborate transformations in Indian banking’s history.

What do you miss most about the C-Suite?

Honestly, I do not miss the C-Suite trappings as of now. Initially, the infrastructure and support systems were missed, but I learnt to deal with the new way of life pretty soon. The new-found freedom to pursue varied interests at your own pace is amazing. More importantly, you are liberated from reporting to anyone else. You also learn to live with your own brand and personal credibility as you give up your borrowed visiting card.

I felt proud to get my new visiting card printed post AIG – with only my name and email address. I must share that as part of my mentorship guidance to new hires, I encourage them to continuously enhance their personal skills, pursue their passions and develop their own personalities in addition to their relentless desire for professional growth. The bottom line is I motivate them to fill the backside of the visiting card which is empty in addition to the front. The “true equity” lies in the “back of the card” which they will carry with them since they will leave the front side with the employer.

In our time, we assumed a lot and relied on global brands that were seen as highly progressive and safe bets. A job in a reputed MNC or foreign bank was the top draw, and “perhaps” made you more eligible on different fronts. Corporate preferences have altered as fast growing domestic institutions provide more professional growth and financial upsides. A large number of global institutions are re-evaluating their global presence and ability to deal with fast emerging domestic competition. There are a slew of new entrepreneurial opportunities which provide exciting career options not available earlier.

What are the changes in the corporate world that you see now that are vastly different from your time?

It is very heartening to see corporations and employees becoming more socially responsible. Corporates are fast recognising the importance of all stakeholder interests. Boards are taking their responsibility towards ESG far more seriously than ever before. There is much more focus on diversity. The standards of corporate governance, transparency and compliance have undergone a change. Market expectations are fast evolving which are making corporations more nimble with ability to adapt as required. It is understood now that corporate reputation has to be earned and cannot be bought.

Which business leader in the current crop impresses you?

It is a difficult choice. However, from the private sector, I have very high regard for N. Chandrasekaran, chairman, Tata Sons. A consummate professional and a phenomenal leader.

In the public sector, there are many unrecognised leaders who have delivered despite many limitations. I have immense respect for them. Since I closely engaged with Arundhati Bhattacharya when I was on the SBI board, I rank her amongst the best business leaders amongst state-owned enterprises. She not only led SBI’s transformation from the front, but also (I) admire her for taking a successful full-time role with Salesforce India post her years at SBI.

How did you plan for life after retirement?

So, “retirement” is presently not there on my horizon. As long as I am physically able and mentally agile, I would like to stay fully engaged. I have my responsibilities at SPM Capital, board roles and commitments with not-for-profit entities.

My next project for India is to pursue the goal of making global regulatory architecture more contemporary in line with the fast-emerging global economic order to support sustainable and balanced growth. There is an opportunity for India to take the lead during its presidency of G20 later in the year and initiate the reshaping of the global regulatory construct through the establishment of an International Institute for Regulatory Development. There is a need to “tropicalise” the global regulatory framework. Through the G20 presidency, India could become an architect of the reshaped, evolved regulatory paradigm that is equipped to deal with the intractable. Maybe a bit ambitious, but if we do not start believing in our capabilities for playing a role at the high table in developing global regulatory architecture, we will never get there.

Is there anything you would tell your younger self?

Keep the fire burning. There is much to be done. But at the same time, believe in your passions and don't wear a mask while going through life in order to keep the outer world happy.

What is your advice for the next cadre of corporate leaders?

Believe in yourself. Dream big. Have honesty and integrity of purpose. Don’t throw stones, because there is no one to pick them at the other end. Your future is up to you, and it is in your hands to build a better India.