Veteran Banker Romesh Sobti set to join Aditya Birla Capital board

Rehauling of business strategy is presently underway; set to approach the RBI for banking license once final guidelines is released

A fortnight after the Reserve Bank of India’s internal working committee (IWC) report opened the possibility for conglomerates-led non-banking finance companies (NBFCs) to convert to banks, Aditya Birla Capital may set the ball rolling. Veteran banker and former managing director and chief executive officer of IndusInd Bank, Romesh Sobti may join the board of the AB Capital, as a nominee director of Advent Capital. Advent had invested Rs 1,000 crore in AB Capital last September, for Rs 100 a share. While its stake in the company is 4.23 per cent, the private equity major, as part of its deal, had secured a board seat in the non-bank. 

Post retirement at IndusInd Bank, Sobti took the role of operating partner at Advent and in this capacity would be appointed as a non-executive board member at AB Capital. RBI’s approval on Sobti’s appointment is, however, awaited.

AB Capital is already revising its operations and business strategies and in the light of a huge stock price depletion from Rs 250 a share, when it listed in September 2017 to now, highly placed sources say its current board insisted that a new plan be worked out to chart its growth trajectory. With the RBI’s IWC report paving way for AB Capital to relook at its banking aspiration, sources say deliberations on these lines have also gathered momentum. “AB Capital is expected to make a presentation to the RBI in a week to ten days with its feedback on the IWC report and also seek some regulatory leeway or dispensation on aspects which would be critical for it to convert to a bank,” said a person aware of the development.

 

It is also gathered that the rehauling of operations could result in some of AB Capital’s old-timers moving out of the company.

A mail sent to AB Capital in this regard remained unanswered till the time of going to press. 

Sobti’s induction into the board is expected to reorient the lender's business and make it more acceptable from a bank license perspective. Apart from NBFC operations, AB Capital also berths a housing finance arm, which lately is focused on affordable housing. In its 49 per cent joint venture with Sun Life, AB Capital operates its life insurance and asset management businesses. The lender also forayed into the health insurance space in 2015, partnering with South Africa’s MMI Holding, having 49 per cent stake in the business.  

“Once the final guidelines of the IWC recommendations are out, AB Capital may make its bank license application,” said another highly placed source. It may be recalled that Aditya Birla group was among the twenty-two contenders for a bank license in 2013, though subsequently, it was awarded only to two – Bandhan and IDFC. Later in 2017, the group applied and secured a payment bank license. A year after it commenced its payment bank operations in 2018, the company surrendered the license, citing reasons of business unviability.

HIGHLIGHTS

- Veteran banker Romesh Sobti set to join AB Capital’s board

- Sobti is currently an operating partner at Advent Capital, which hold 4.23 per cent in the non-bank lender

- AB Capital rehauling its business strategy; keen on pursuing banking license once final guidelines are issued

- Was an applicant for banking license in 2013; later applied and secured payment bank license in 2017

- Surrendered payment bank license in 2019 citing business unviability