It is now a two-way race between Sabharwal, Tata Capital’s managing director (MD) and chief executive officer (CEO), and Sumant Kathpalia, head of consumer banking at the Hindujas-promoted bank, according to sources in the know.
This is probably the first instance where the chief of a non-banking financial company (NBFC) is being considered for the corner office at a bank. When contacted, Tata Capital said: “The information is completely untrue.” Sobti’s term as MD and CEO of IndusInd Bank will end on March 23.
Outsiders have moved into the corner offices in two private sector banks — Amitabh Chaudhry from HDFC Life Insurance succeeded Shikha Sharma at Axis Bank, and Ravneet Gill from Deutsche Bank came into YES Bank after Rana Kapoor’s removal. Sandeep Bakhshi, who replaced Chanda Kochhar as ICICI Bank MD and CEO, was chief operating officer at the bank, and an ICICI group veteran of over three decades.
IndusInd Bank, however, doesn’t face any of the issues that cropped up ahead of the baton change at ICICI Bank, Axis Bank, and YES Bank. It is surmised that the central bank may not necessarily plump for continuity by way of an “insider”.
No other bank in the country has almost its entire top brass so closely associated with its helmsman throughout the larger part of their careers. And it was always speculated that it is not certain if the team will hold together in case one among them was to step into Sobti’s shoes.
This concern was flagged in 2014 by analysts when Sobti’s tenure was extended by a year (the retirement age for the heads of private banks was 65 then). A year’s extension was given as then in-the-works P J Nayak Committee on governance in banks had initially deliberated on 65 as the age limit for bank CEOs. It was later decided to go by the Companies Act and the limit was extended to 70.
The RBI expects private banks to put in place a succession plan well in advance so that there is adequate time for the identified successor to settle down – be it an internal or external candidate. In the case of both Sobti and Puri, the year gone by has been about whether the central bank would align the age limit for directors in private bank boards to 75 from 70 to bring it in alignment with the Companies Act (2013). It did not budge, and wanted fresh talent to come in.