 Hello and welcome to NewsClick. I'm Paranjoy Gohar Thakurtha and we continue our series of conversations with independent analyst Hemindra Hazari. In the first series we talked about the ICICI Bank, the Infrastructure Leasing and Financial Services Group, we talked about Kotak Mahindra Bank, we talked about Yes Bank and then we've also discussed the rather unusual transaction involving HDFC, Housing Development Finance Corporation and the IL and FS Group. In this episode we're going to look at the circumstances under which Mr. Amitabh Chaudhary was appointed as the Chief Executive Officer of Access Bank. Now he's been appointed for a three-year term starting the 1st of January 2019 and Mr. Hazari is going to look at whether he was an appropriate choice, why he was chosen in the first place and whether he would be able to turn around the bank which has been of late confronted with many issues of corporate asset quality, lack of competent commercial banking, leadership and poor operational risk management. Now Mr. Hazari, why have you been critical of the appointment of Mr. Amitabh Chaudhary? Just because he was earlier the Chief Executive Officer of HDFC Standard Life which is an insurance company, he's an outsider. He's not part of the so-called group or some would even say clique which had apparently lost credibility when the bank was headed by Ms. Shikha Sharma. So he is an outsider. So what if he doesn't have the kind of commercial banking experience he would nevertheless perhaps be a person who could help improve the working of the bank. Why do you find it mysterious that such a person was appointed? See I had two attributes that the new CEO should have had in Access Bank. One is that he should have been an outsider which he does qualify for because you cannot have someone associated with the old CEO take charge when you know all the mistakes that the earlier one has done has to be reversed. So in that sense I was satisfied that you are pointed an outsider. Now my second criteria was that you required an experienced commercial banker because this bank in my opinion had serious issues of shortfalls in commercial banking. May it be credit you know assessing credit and monitoring corporate credit whether it's operational risk management that means in you know knowing your customer anti-money laundering schemes which they have been fined by the Reserve Bank of India and even on its own accounts that for two consecutive years the Reserve Bank had caught and penalized this bank for fudging the books. So in such a sense I would have been happier if you had a seasoned commercial banker taking charge. Now having said that I would also like to add that Shikha Sharma's predecessor Dr. P. J. Nayak. Yes and I'm just stopping you here. I'm using your own arguments. Mr. P. J. Nayak was a bureaucrat. He was a member of the Indian administrative service. He took charge when Axis Bank was still UTI Bank UTI as in the unit trust of India. This is way back in January 2019 years ago. At that time too the bank was going through a very very difficult period. Its asset quality was poor. It didn't have adequate capital capital adequacy issues but Mr. Nayak was able to turn around the bank. So why can't Mr. Amitabh Chaudhary be able to turn around Axis Bank if Mr. P. J. Nayak could do it? See one in individual it's all about the individual and you know that we have to see whether Amitabh Chaudhary you know he does rise to the occasion but second and more importantly under P. J. Nayak's leadership the bank on its board he got a lot of experience former PSU bankers on the board. He also got in from private equity. He was able to get private equity and private equity nominees on the board were very experienced hardcore foreign commercial bankers. So there was a pool of solid commercial banking experience on the board plus his senior management although I don't think they had executive directors probably at that time but his senior executive management were all hardcore commercial bankers. Now the problem right now you have Mr. S. Vishwanathan who was the former managing director of the State Bank of India who's on the board. Exactly and this is the point. He's an experienced banker. Now let me tell you this. Now this is the strange anomaly which came in under Shikha Sharma's leadership is that on a 15 member board it had I think three executive or four executive directors including Shikha Sharma. None of the executive directors had been in hardcore commercial banking before they came to access bank. None of them I think had ever worked in a bank branch. So you had this strange situation that on a prominent private sector bank board there was only one individual which is Mr. S. Vishwanathan who was a hardcore commercial banker. Okay Mr. Hazari you know you've used very very strong language in your article in Smart Karma dated 10th of September 2018. You've talked about a so-called coterie that had been appointed by Shikha Sharmaji. You've gone to the extent of saying that if Mr. Amitabh Chaudhary wants to restore confidence you have suggested two heads should roll. This is not my language it's your language and those of Mr. V Srinivasan the deputy managing director who's been in charge of corporate credit since 2009 and Mr. Jay Ram Sridharan the chief financial officer. Who are you as an independent analyst to suggest whose heads should roll? In the private corporate sector which I have worked all my life and in the capital markets I think one thing is very critical in the free market system is this accountability. The underlying principle is that if you've done your job well you will be rewarded either through promotions or through incentives and you know incentives and increments and if you do a poor job you are fired. That is the basic principle of accountability in the capitalist system and the markets is all about that. I have no problem if these executives had done their job well and they were rewarded with increments, bonuses, stock options but in Axis Bank the problem that it has is that of very poor corporate loan selection and monitoring and for that I hold Mr. V Srinivasan whose headed this department since he joined. Since 2008 or 2009 when he joined he's been looking after this portfolio and this is the portfolio which has got the bank into trouble. All right in the second case is that Mr. Jay Ram Sridharan he has as the chief financial officer he has signed off on two consecutive years of accounts which is FY 2016 and FY 2017 which have been questioned by the Reserve Bank. Exactly so for me it's very clear to me that heads have to roll. All right last question to you Mr. Hazadi you're the title of your article Ogean stables await the new appointee at Axis Bank. Mr. Amitabh Chaudhary in this case what is this analogy kindly explained for the benefit of our viewers those who are listening to you. See I have written a series of articles on what I refer to as the mismanagement and the misgovernance. This is in Axis Bank. In smart karma. On my own plus this is all from my own research also some of it goes into smart karma. Now in my opinion and my view which I have documented you have seen very poor corporate credit. You have seen their staff being arrested for money laundering which shows very poor operational risk management. Now these are very core functions of a bank. You have seen their accounts being questioned by the regulator. Now if your accounts are questioned in a bank and a bank is supposedly all about trust what does it tell you about the bank? What does it tell you about the senior management? And analogy with the Ogean stables? Well it all has to be cleaned up and I hope that you know that Mr. Amitabh does thoroughly clean it up. Okay time alone we'll tell whether that happens or not. Mr. Amitabh Hazadi thank you very much for speaking to Newsclick on the subject. This is the second series of conversations we are having with Mr. Amitabh Hazadi in the first of the series we discussed about HDFC and ILNFS Group. We've just completed a discussion on the challenges that await the new chief executive of officer of Axis Bank formerly UTI Bank. We'll continue this series of conversations and in the next series we're going to look at recent developments that have been taking place at Yes Bank and whether after a Shakespearean tragedy we're going to see some new developments and new changes and whether Yes Bank will be able to get out of the crosshairs of the Reserve Bank of India. Keep watching Newsclick and you're going to hear more conversations of the kind you'll never get to hear anywhere else which critically examine the working of India's private banks. Thank you for being with us.