Jet Airways has been one of the toughest jobs as SBI chief: Rajnish Kumar

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SBI’s board members wished to receive a letter of support from the government before praising Jet Airways’ plan to resolve the crisis, former bank chairman Rajnish Kumar said.

In his book “The Custodian of Trust”, Kumar said dealing with the Jet Airways problem was one of the most difficult jobs he had to accomplish during his hectic tenure as the largest lender. from the country.

Most of the banks were extremely reluctant to support a resolution plan for Jet Airways, he wrote, while recalling the developments regarding the airline’s resolution plan which unfortunately failed as the promoters did not succeed. were unable to meet the required conditions within the stipulated time.

“For me, too, this was one of the most difficult cases, even the SBI board being uncomfortable supporting me on this issue, not because I didn’t appreciate their support or their goodwill, but because they felt that this posed a huge risk to the bank’s reputation.

“Therefore, they did not want to be part of such a decision without receiving an explicit letter of support from the Department of Financial Services (DFS) or the MoCA (Ministry of Civil Aviation). I had not faced such a difficult situation throughout my two year tenure as the head of SBI affairs, but I saw it as a major learning experience that proved to be useful. to resolve the YES Bank crisis, ”he said.

Eventually, the company ceased operations on April 17, 2019 – a sad day in the history of civil aviation in India, when one of the country’s top airlines had to be brought to a standstill, Kumar said in the published book. by Penguin Random House India (PRHI).

Subsequently, the Mumbai bench of the NCLT admitted in June 2019 an insolvency claim against Jet Airways filed by the consortium of lenders led by the State Bank of India (SBI).

Jet Airways owed over Rs 8,000 crore to a consortium of lenders led by SBI, in addition to liabilities of over Rs 25,000 crore to its suppliers.

Kumar further said he had little hope for the airline’s revival as there were hardly any assets to support as its planes are mostly leased and slots are owned by airports. Relaunching a stranded airline has virtually no precedent, he noted.

“Unlike the RBI, which has extensive powers to rescue a financial entity, the aviation industry does not have such authority. Airline financing remains a high-risk activity for banks, as the losses suffered by banks in high-profile cases such as the failures of Kingfisher Airlines and Jet Airways have proven time and again, ”he said. underline.

Kumar had a turbulent three-year tenure (October 2017-October 2020) as head of the SBI, which alone holds more than 20% of the market share.

In the book, he said that the period in which he took charge can in no way be called “normal”.

When he took the reins of SBI, India’s banking industry was going through one of its most tumultuous phases as non-performing assets (NPAs) hit an all-time high after Asset Quality Review (AQR).

The problem of non-performing loans (NPL) had severely affected banks’ balance sheets and profitability, coupled with the bankruptcy of a few large non-bank financial corporations (NBFCs) and the near collapse of the fourth largest private sector lender, Oui Bank, posed a serious threat to the country’s private sector banking system, he said in the book.

Kumar, through his memoir, shares his “incredible journey” as a banker – from joining the SBI as a probation officer in 1980 to his presidency in 2017 – capturing the many changes he has witnessed in the industry. Indian bank during his career.

Prior to his appointment as Chairman, he was Managing Director (National Bank Group) at SBI, overseeing retail and digital banking activities. He helped secure cash in all corners of the country through the bank’s extensive network during demonetization.

The book has received support from the mainstays of India Inc and the banking industry.

While Tata Sons Chairman Emeritus Ratan Tata called the book a “chronicle of contemporary economic history,” Uday Kotak, CEO of Kotak Mahindra Bank, said the book has the potential to be a “blockbuster. of Bollywood “.

Kumar is currently Director of the Boards of HSBC Asia Pacific, L&T Infotech Ltd and Lighthouse Communities Foundation. Last month, he was appointed economic adviser by the government of Andhra Pradesh for a two-year term. He was given a ministerial grade post.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)


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