Pramit Jhaveri: Taking charge at a challenging time for the Tata trusts

A banker is a custodian of trust, more so given the deposits raised by a bank that are then loaned. It is just as well, then, that 56-year old Pramit Jhaveri — former India country head of Citigroup — is now on the board of the Sir Dorabji Tata Trust, one of the two main Tata trusts that hold a large stake in group holding company Tata Sons.

In the days to come, Jhaveri can be expected to play a larger role at one of the country’s largest business groups than his current business card suggests. As on date, Venu Srinivasan, is the only Trust nominee on the Tata Sons board, and speculation is rife that Jhaveri may be find a place on it. 

This is the fourth instance of a senior finance professional entering the senior decision-making levels at the Tata group. In the late nineties, Kishore Chaukar of I-Sec (part of what was then ICICI) had been appointed to the board of Tata Sons; then Amit Chandra of Bain Capital found a place on it; and most recently Saurabh Agarwal, a veteran investment banker who had held key positions at Standard Chartered Bank and Bank of America-Merrill Lynch, was appointed the Tata Group’s chief financial officer. 

Jhaveri, who comes from a family of jewellers, brings to the table a worldview formed by leading an entity like Citigroup, with a presence in 98 countries, with corporate and institutional clients, global and Indian multinationals; and large, mid- and small-sized enterprises and entrepreneurs. There is, of course, the fact that the Reserve Bank of India was not in favour of giving Jhaveri — a career Citibanker — an extension to his tenure as India head of Citigroup. This was over slipups regarding the disclosures of his investments. But it also true that many bank CEOs have stayed at their desks despite the far severe dislocations in the banks they headed.

Few foreign bankers answer to Jhaveri’s profile. He had signed up at the Wall Street behemoth in 1987, had helmed its local investment banking practice, and gone on to occupy its biggest corner room. Of the four decades, he spent at Citigroup, the last was the most eventful – it will be remembered for long as his legacy.

When he took over the affairs in 2010, he had a clean-up act on his hands. Two years into the global financial flu, the extent of Citi’s ambitions in the country were unclear. At its headquarters, then global Sherpa, Vikram Pandit, and his A-team, were busy steering Citigroup through a financial minefield. And questions were being asked of Citi -- as well as other foreign banks — on the level of capital support they could expect from their headquarters. 

Jhaveri, who had taken over from Mark Robinson (as India-head of Citi), had to keep these variables in mind. His task was as follows — keep a close watch on the bank’s corporate loan-book to ensure that the follow-on effects of the global meltdown did not come to hit the bank’s local book. Jhaveri also ramped up internal controls in a big way after a Rs 350-crore internal fraud was unearthed soon after he took charge.

Perhaps the most painful of decisions concerned unsecured, personal loans turning bad. Citi bit the bullet, and closed 280 branches of Citifinancial, the in-house non-banking financial company that hawked such products — it is, till date, the biggest winding down of such an operation. The move was of particular significance as foreign banks in India don’t have the freedom to open branches. Citifinancial had been set up to dance around this limitation, and its winding down meant a major relook at its retail banking strategy in India.

Under his watch, Citi’s local assets nearly doubled between FY10 and FY19, to Rs 1.86 trillion; during the same period, gross non-performing assets improved massively to 1.37 per cent from 3.43 per cent. Net profit grew 386 per cent to Rs 4,185 crore in this period, even as banks of all hues struggled.

It will be particularly interesting to watch Jhaveri’s role now that a working group (WG) of the RBI on core investment companies has laid out a road map as to how the big boys of India Inc are to raise capital, restricting the layering of scores if subsidiaries.  

He takes charge at a challenging time for the Tata trusts. Six of them are challenging the cancellation of their registration by the income tax department for allegedly violating the terms of the trusts. Last year, the Sir Dorabji Tata Trust was the recipient of an income tax order for exceeding the exemption made available to the trust, including paying then managing trustee R Venkataraman, a confidant of Ratan Tata, an exorbitant salary. That controversy ended with Venkataraman standing down. Jhaveri’s job off the starting blocks could well be reviving trust in the trust.