We have deep pockets and completely back IndusInd Bank: Ashok Hinduja

There is a lot of mistrust in the financial system right now. IndusInd Bank has been affected. Do you believe there is a systemic risk?
It is clear that since the IL&FS issue there has been a significant slowdown in the financial space, we went through a period of liquidity crunch for NBFCs, there has been bad news on the economic growth front as well and corporates have stopped expansion. This whole situation has given rise to punters who are using a few people for speculation, but it’s hard to catch them. Speculators don’t realise that to earn quick bucks, they are harming a healthy institution.

The failure of a few corporates has led to a lot of gossip and speculation, this is what happened with IndusInd Bank as well. Everything was smooth sailing for us; just one transaction on IL&FS, which was a triple A rated firm and almost with a sovereign backing, went bad. We have deep pockets and we are completely backing IndusInd bank, though it does not need capital for the next two years.

There was a pledge which was created a couple of years ago with Citibank, a regulatory filing on that also led to some panic…

Mauritius-incorporated IndusInd International Holdings (IIHL) is the promoting entity of IndusInd Bank, which has over 600 investors and HNIs all over the world. They are today committed with the company for more than 25 years, their NAVs have risen substantially, they also want to part exit some of these investments. We decided to list IIHL, when you list you need an operating entity. So we decided to part leverage. In 2016, we decided to pick up some stake in MauBank of Mauritius. To pay for that, we decided to pledge some shares but eventually the sale did not happen due to pricing issues. We are still looking for more opportunities, so that the entity can become an operating firm and go for listing. When you renew the document, it needs to go to Sebi and stock exchanges, but it led to more confusion. But, we have amply clarified this.

Acording to me, action against the founder (Rana Kapoor of YES Bank) could have been deferred until all the investments were in place.

-Ashok Hinduja

What about Yes Bank? Are you looking to invest in it?
We are investors, we have two pockets – one domestic the other is overseas, we take advantage of opportunities. The opportunity with Yes Bank moved around a lot. We looked into Yes Bank as well but we are not interested. As an investor what is the purpose? We already have a bank; we will just be a participant. But if you ask me whether it is a good investment at the price decided upon, I would say it is a good buy for an investor looking at a 3-4 years horizon.

But, with all the action being taken against Rana Kapoor, do you still see it is as a good investment?
I don’t know how the investigative agencies will assess the situation. But, according to me, action against the founder could have been deferred until all the investments were in place.

Why did you drop out of the race to buy Jet Airways?
In Jet Airways, we saw an opportunity, as norms allowed an Indian partner. Etihad approached us to partner with them, we categorically told them aviation is not our forte, but we don’t mind looking into it. But, when we looked we saw that several protections and dispensations weren’t there. It did not make sense for us.

With the fall of Yes Bank, there is a worry that flight of deposits could happen in private banks. Do you envisage such a situation?
I would give credit to the regulator; it has given several statements to allay fears. It has a strong past record when it comes to saving bank failures. All governments want public and private sectors to exist together that is why they opened up licences.

One good thing has been that the regulator never allowed any bank to fail; over the years that has instilled the confidence in depositors. There might be some delay, but the money is safe.

What about the Indian economy? It has thrown up a lot of bad news in recent months. Is the government taking steps in the right direction to correct this?
These are policy matters and it is best left to the government which direction it wants to give. What is priority for it, and how does it blend the priority and the economy. You also need to keep in mind that a lot of clean-up has happened in the system; there is stress on good governance and processes. When you take a lot of policy actions, you are bound to have a lot of disruptions. The Prime Minister has brought in a lot of new ideas in several sectors, he has brought in transparency… What the government has been doing is right; to change something old you need drastic steps. But, now each and every error is becoming criminal. It’s high time to consider this, then each and every businessman will say why should I take decisions, why don’t I sit quiet. I think they have recently modified a lot of criminality into civil procedures. I think the future is great for India; it is just the question of time.

There is a lot of scare over the coronavirus globally; businesses are clearly being impacted. Do you believe this event could disrupt the global supply chains?
One hundred percent... that is why one doesn’t know when it will end, we don’t know to what extent it will spread. The lockdown measures the governments are taking will have an obvious impact. Manufacturing in China got disrupted for nearly two months, the virus is now spreading to the UK, US. It’s also slowly coming to India. The fear psychosis has seeped in, people are not travelling, businesses are being disrupted, so it will affect the economy.