Uday Kotak used to play the sitar. V. Vaidyanathan, another entrepreneur-banker, who loves to be called Vaidya, plays the guitar.
For five years, between 2014 and 2018, he performed at Genesis Foundation’s “CEO sings for GF kids” programme at the ITC hotels in Delhi. He’s played Elvis Presley, George Baker, Westlife, and Stevie Wonder at this fund-raising event for children, where CEOs with a passion for music and commitment to philanthropy perform.
Those who have listened to his songs don’t swear by Vaidyanathan’s singing prowess, but he gives a damn about what others say. He doesn’t mind sharing the stage with Rabbi Shergill at such events. Or, for that matter, even with the Big B. When Amitabh Bachchan dropped by the IDFC First Bank’s headquarters at BKC after the bank tied up with him as its brand ambassador, an elated Vaidyanathan, wielding his guitar, sang “Wind of Change” by the Scorpions for Bachchan in the presence of his colleagues:
I follow the Moskva Down to Gorky Park
Listening to the wind of change …
He is not a trained singer. So what? Like former RBI Governor Raghuram Rajan, he believes in the dictum “I do what I do.” Once he takes a call—be it professional, hobby, or fitness-related—he doesn’t feel shy and makes every effort to play the role.
In 2016, at the ITC Grand, people saw his Elvis Presley avatar at the GF kid’s event. Wearing a red robe, strumming the guitar, he sang “Paloma Blanca” by George Baker:
When the sun shines on the mountain, And the night is on the run
It’s a new day, it’s a new way, and I fly up to the sun
I can feel the morning sunlight, I can smell the new-mown hay I can hear God’s voice is calling, for my golden sky light way Una paloma blanca, I’m just a bird in the sky
Una paloma blanca, over the mountains I fly No one can take my freedom away.
His voice was almost drowned by the guitar. So what? He had prepared himself for the show—grown his hair long, shaved his moustache and even his chest, to play the role of Presley. Which CEO and promoter of a listed NBFC in India would do that?
Had he had his way, Vaidyanathan would have been an Indian Air Force pilot, not a banker. From the Kendriya Vidyalaya Pathankot, at 16, he wanted to join the National Defence Academy and become an IAF pilot. The Pilot Aptitude Test and Services Selection Board interview went off well, but the medical test found something wrong with his left eye.
It turned out that when Vaidyanathan was a kid playing on the terrace of a one-storied house in Sunabeda, Odisha, where his father was working for Hindustan Aeronautics, he had fallen from the terrace of the first floor. It was not a life-threatening injury, but his left eye was damaged.
The IAF gave him two months to fix it and reappear for the medical test. He rushed for an eye operation at Jalandhar. His father sold a newly-bought second-hand Kelvinator fridge, their first, for Rs 3,000 to pay for the operation. It went off well, but he still flunked the IAF medicals.
Vaidyanathan left Citibank and joined ICICI Bank in 2000 to power his career. He joined the board as the youngest executive director in ICICI Bank’s history at 38 (later, he became MD and CEO of ICICI Prudential Life Insurance Company). But he quit the group when he figured that it would be more than a decade to have a chance in the corner room.The new CEO Chanda Kochhar was just 47.
Even before that, he had zeroed in on an NBFC, but the 2008 global financial crisis upset his plan. In 2012, he revived his old idea of acquiring an NBFC. He turned entrepreneur through an audacious leveraged buyout, funded by personal leverage of Rs 80 crore secured by the stock and his house, paying 13 per cent interest for the loan, calculating that the value creation on turnaround will outrun the interest cost. He renamed the company CapitalFirst. The stock multiplied from Rs 100 to Rs 688, at which stage he sold the stock to close the loan. The stock went on to Rs 850 at the time of the announcement of a merger plan with IDFC Bank.
OneStep at a Time
On leaving ICICI Bank, he wanted a bank under his belt and knew the best way to go about it was through an NBFC, and Capital First would be the route. Uday Kotak had done this in 2003 when Kotak Mahindra Finance became the first NBFC to get a banking licence.
Going for a development financial institution wearing the skin of a bank with just 1.56 per cent net interest margin, 92 per cent cost-income ratio, and less than 9 per cent low-cost CASA has been more audacious. Capital First merged with IDFC Bank in 2018, but for all practical purposes, the NBFC got a banking licence without applying for it! Vaidyanathan has taken over the management of the bank.
He takes one step at a time. His first objective was to ramp up CASA for a stable, low-cost deposit base. Vaidyanathan didn’t mind offering 7 per cent interest on savings accounts, the highest offered by any mainstream bank.
Once the purpose was achieved (close to 51 per cent CASA in June 2021, second highest in the pack of private banks, after Kotak Mahindra Bank) and the bank had plenty of liquidity, he started cutting the rate. At the same time, he doubled the branch network.
After that, his eyes are set on building retail assets. He moves ahead step by step, within a predefined frame.
He never loses his cool. With equal felicity, Vaidyanathan covers up his killer instinct. Once having acquired the NBFC, he needed investors!
You’ve heard of two-timing, but he was three-timing PE players—breakfast, lunch, and dinner with different PE firms, with spreadsheets demonstrating the business model.
Once, Vaidyanathan had an appointment with Arun Kumar Sharma, chief investment officer, global markets, International Finance Corporation, at Sofitel in BKC. Sharma asked him why he was shivering—he was running a high fever due to dengue. Another time, an investor refused to give him an appointment when Vaidyanathan was desperately looking for money for Capital First. Under tremendous stress to raise equity, debt, and hire people, night after night, he could not sleep. Finally, one night, at 2 a.m., his wife took him to the Hinduja Hospital at Mahim to treat his insomnia.
One evening, Vaidyanathan learned that the elusive investor would be flying from Delhi to Mumbai. He booked tickets for two back-to-back flights—from Mumbai to Delhi and back on the same day. He got out of Delhi airport and then got in again through the departure gate to catch the flight to Mumbai. That’s how he could spend two hours with the gentleman on the flight.
He was looking to raise equity for CapitalFirst venture to set up the business, but that was not easy in the difficult economic conditions of 2012–13. After chasing 15 private equity firms for a year, the gentleman on the flight agreed to invest around Rs 800 crore.
The next part of the story is even more interesting. The transaction required the approval of the now-defunct Foreign Investment Promotion Board (FIPB). Listing the case at FIPB was not easy.
One day before the FIPB meeting, Vaidyanathan was told that it would not get the FIPB clearance as the NBFC subsidiary owned a property. The FIPB had different norms for real estate. So, the property had to be sold. But selling the property worth around Rs 100 crore within a month was not easy. Time was running out, and there was panic all around. Would the private equity firm pull out of the deal?
Vaidyanathan managed a fire sale of the property within 25 days and moved the FIPB once again. Meanwhile, the finance minister was changed. The new finance minister signed off the minutes of approval of the deal.
Once he sets his eyes on something, Vaidyanathan doesn’t give up till he gets it. In 1994, working at Citibank, he moved to Delhi. The night he landed, a classified ad selling a Maruti 800 caught his attention. With Rs 15,000 in his wallet, Vaidyanathan landed up at the seller’s house in Noida late evening in an autorickshaw. He liked the car and decided to buy it. But the seller was not impressed that Vaidyanathan worked for Citi and would pay the rest soon (the tag was Rs 90,000).
Vaidyanathan rushed to the nearest ATM, withdrew a wad of cash using his credit card, and promised the rest in IOU—a phonetic acronym of the words “I owe you”, acknowledging the existence of a debt. By midnight, he drove down in his newly-acquired second-hand car to his home at Hauz Khas, where he was living.
In 2014, when Vaidyanathan asked RBI Governor Raghuram Rajan for a banking licence, he was told to wait for the licensing norms for small finance banks, due soon. But Vaidyanathan was eyeing a universal banking licence.
Just after the deal with the ShriramGroup fell through, in November 2018, when IDFC Bank boss Rajiv Lall met Vaidyanathan over a brunch of curd rice and khichdi at Four Seasons Hotel, Worli, he smelt the cheese. No investment banker was involved in the project, which was called “Idli- Dosa”. A series of meetings followed at the same place, over the same menu, to stitch the deal.
Earlier in 2012, Capital First was desperately looking for equity after attempts to raise equity from qualified institutional investors failed. Vaidyanathan approached Lall, then heading IDFC, the bank’s earlier avatar, seeking a lifeline—a Rs 200-crore subordinated debt. Lall couldn’t oblige him. A few years later, Vaidyanathan returned to take over as CEO of the same bank! Asenior banker who had seen him in ICICI Bank says, “In the bank, he was hungry for growth. He has matured over time. We are eagerly watching how he transforms IDFC First Bank.”
Vaidyanathan’s phenomenal rise reminds another banker of the proverbial cat with nine lives. Cats always land on their feet.
Does he also lack tolerance for dissenting ideas? Most of his colleagues say no. As a boss, he takes the call but listens to others’ points of view and encourages dissent. Yes, two senior executives in the bank who had come from the NBFC— one was heading technology and operations and other retail assets—had left the bank abruptly after the merger. However, a majority have stayed put, and they swear by his leadership acumen.
Amit Kumar is one of them. After a 15-year stint with HDFC Bank, Kumar had spent three years with IDFC Bank by the time Vaidyanathan walked in as the new boss. “He keeps asking questions till he understands issues and follows a consultative approach,” he says.
In Vaidyanathan, Kumar sees some streaks of Aditya Puri, the longest-serving bank CEO anywhere in the world. He gathers information from the ground and uses it for business. Once, while buying medicines, Vaidyanathan checked how the PoS or point of sale machine provided by IDFC First Bank was working at a chemists’ shop just outside his housing society in Worli and made changes accordingly.
He does not formulate five-year vision statements but works on annual business plans with meticulous care. Instincts and infectious enthusiasm are his forte. In the mid-1990s, when he joined ICICI Bank to build its auto loan book, Vaidyanathan didn’t raid his previous organisation for talent. Instead, he took away Citibank’s loyal dealers, the bedrock of auto loans.
On leaving ICICI, he didn’t hire anyone from the bank for eight years.
Maninder Singh Juneja, partner of private equity fund True North, has seen Vaidyanathan growing in the profession. Within a year of joining ICICI Bank, when he became the head of the entire retail business minus the mortgages, Vaidyanathan wanted Juneja to shift to Mumbai to head the risk division. However, Juneja had just bought a flat in Noida and was not too keen to come to Mumbai as the EMI for the home loan plus rental for the Mumbaiflat would be too much to manage.
But Vaidyanathan wanted Juneja at any cost. On the spot, he offered him a 100 per cent bonus in advance and asked the HR division to divide it into 12 parts and add to his monthly salary. Since the annual performance appraisal for the executives had already happened by that time, this was the only way he could raise Juneja’s take-home salary.
As a leader, Vaidyanathan believes in the Pygmalion effect—a psychological phenomenon wherein high expectations lead to improved performance. It’s also called the Rosenthal effect. He makes people around him believe that they can do more than what they are doing.
I got a taste of it when Vaidyanathan invited me to play cricket at 1 Indiabulls Centreat Lower Parel,Mumbai, where Capital First was headquartered. After a brief meeting in his office on the 10th floor, he showed me the “cricket ground”, covered with nets on all sides. We played for a little over half an hour. He made me believe that I was batting well! I got carried away and forgot that I had a past injury in my right knee. I realised that when I had to check in with orthopaedic surgeon Nicholas Antao a day later.
In the ICICI Bank days, he often travelled from city to city for days. Sometimes, these trips were not planned. It could start with a trip to Delhi from Mumbai. Then, he would go to Kolkata from Delhi and from there to Hyderabad or Bengaluru, carrying just a briefcase. He would buy clothes for attending meetings.
Vaidyanathan pushes himself hard for anything and everything—be it creating an institution, singing songs or running a marathon. He even learnt how to solve the Rubik’s Cube in under three minutes. The day a young management trainee did it in three minutes, he took a bet with her and made it in two minutes and 28 seconds on the spot, sitting at her desk.
Almost everyone who knows him well is aware of his obsession with fitness. Once, at a retreat in Moscow organised by the insurance agents, Vaidyanathan inspired a team of 70 to run on the Moscow streets in a cold December 2009. To excite them, he asked them to buy anything of their choice to equip themselves for the run—shorts, T-shirts, sports shoes.
He keeps himself fit and wants to see others fit and healthy. After entering the IDFC Capital First Bank corporate office at BKC, when he discovered a smokers’ corner adjacent to the bank’s canteen in the ground floor lobby, he had it dismantled instantly and put up “no smoking” posters around. He also sent his personal trainer to help a senior colleague recover from severe back pain.
Vaidyanathan is also a prankster. Once on a trip to the UK, he called up the credit card authorisation head of ICICI Bank well past midnight (late evening in the UK) and said: “This is Kamath speaking. My credit card is not working!” K. V. Kamath was managing director and CEO of ICICI Bank then.
Sometimes, while on a foreign trip with colleagues, he would call the bank’s regional business head in Bengaluru, Vinod Easwaran and request him to sing old Hindi songs, Vinod’s forte. Vaidyanathan would put his mobile phone in speaker mode for others to listen. Such musical soirees could last for hours.
Once, at an Indian restaurant in Milan, having dal-roti and sabji, Vaidyanathan started singing a popular Hindi song: Chitthi aayi hai aayi hai chitthi aayi hai—Chitthi hai watan se chitthi aayi hai. The trigger? One of his colleagues at the restaurant just got his appointment letter from another bank. The gent looked desperately for a place to hide.
On his foreign trips, Vaidyanathan could go to any length for Indian food. Once in Birmingham, UK, he spent more than £200 on taxi fare for a £50 meal for four.
When ICICI Bank made him an executive director in 2006, Vaidyanathan threw a party at the Grand Hyatt, Kalina, in Mumbai. The food and drinks were great, but everyone remembers the party for something else—a skit performed by the retail asset team, scripted and directed by Vaidyanathan.
It was a roleplay in the presence of real people. Vaidyanathan played the role of Kamath while others mimicked the top team of the bank—Lalitha Gupte, Kalpana Morparia, Pravir Vora, et al. Along with their spouses, the entire senior management was in splits.
Often Vaidyanathan gifts his shares (in IDFC Capital First Bank now and Capital First earlier), which are in the public domain, as he has to disclose this under law. For instance, in May 2021, he gifted 4.5 lakh bank shares to three support staff—M. Selvaraj, Alexia Selvaraj, and Utkarsha Todankar— for buying flats. At the prevailing market price, the value of the shares was Rs 2.43 crore.
Before that, he had gifted one lakh shares to his former math teacher Gurdial Saroop Saini. When Vaidyanathan got admission to Birla Institute of Technology, Mesra, he did not have the money to travel there to appear for the interview and complete the formalities. Saini had lent him Rs 500 to travel for the interview.
Till recently he was searching for one Wing Commander Sampath Kumar, who loaned him Rs 1,000 and hasn’t left a trace. Sometime back, a BusinessWorld article mentioned this. Reading that, his son reached out to Vaidyanathan and connected him with Kumar, who now lives in Australia.
On another occasion, when Vaidyanathan was chairman of Capital First, just ahead of the merger of the NBFC with IDFC Bank, he had gifted Rs 60 crore worth of shares—Rs 40 crore to a trust exclusively for social activities and the rest to two drivers, three maids, some colleagues, and family members. Sukanto Roy, an ultramarathoner who trains Vaidyanathan for his marathon four days a week, has many stories to tell about the entrepreneur banker’s behaviour. Vaidyanathan first house hunted with him, then gifted him Rs 25 lakh to pay for margin money to buy a one-bedroom flat at Lower Parel. Sukanto chipped in with his savings and a bank loan. He was keen to buy a flat in a distant suburb. However, Vaidyanathan insisted that Sukantochoose be a midtown location as otherwise, it would be difficult for Sukanto to train his clients, who are from the corporate sector. Then he gifted him a Volkswagen Polo car.
There’s a story behind it. Sukanto had a girlfriend in West Bengal and wanted to marry her, but her mother did not approve of the idea. Vaidyanathan promised to gift him the Volkswagen Polo if Sukanto could convince the mother and get married to her. Sukanto did it. Vaidyanathan kept his promise.
Incidentally, in his bank, Vaidyanathan has introduced a Marathon Deal. For running a half-marathon, his colleagues get running shoes as a gift from him. Those who run a full marathon get shoes plus a German wristwatch with GPS.
While practising marathons with Sukanto, Vaidyanathan often bets on how much time he would take to run a certain distance.
Sriram Jagannathan, who had worked with him in Citibank, is also familiar with Vaidyanathan’s betting. In the Citibank days in Delhi, both used to play badminton every evening. The friendly matches were played with a fiercely competitive spirit. In Vaidyanathan’s running, he sees a business philosophy—a management lesson for endurance.
He drives a Mercedes while going to the office and his blue Toyota Liva or Bullet on weekends. On his way to the office, he often hops into any bank branch to find out what’s happening. The first question he will ask anyone in the office lift: “Kya chal raha hai?” (What’s up?).
Manoj Sahay, who had studied with Vaidyanathan at BIT Mesra, says he was Ranchhodas Chanchad aka Rancho (of 3 Idiots, the 2009 Rajkumar Hirani film) for them. Vaidyanathan was the only student on the campus who had a bicycle and gifted it to a mess boy when asked for a ride. The buthru, the equivalent of chhotu in Mumbai, used to serve dal at the canteen.
He was picked up by Citibank from the campus. The story of his interview is no less interesting. When the interviewer told him that his name was too long, he said the interviewer could call him “Vaidya”. The response was: “At Citi, people call each other Arsehole also.” Vaidyanathan promptly retorted, “Of course, Mr. Fxxxxr.”
In 2005, ICICI Bank held its offsite in Shimla. The flight from Delhi to Chandigarh was cancelled because of bad weather. The team of senior executives took a train to Chandigarh and drove down to Shimlafrom there. In the car, late evening, seeing Vaidyanathan reading a book on retail banking, his colleague Vishaka Mulye, who would later become an executive director of ICICI Bank (and subsequently CEO of Aditya Birla Capital), asked him when he would write his own book (on ICICI Bank’s success in cracking the retail banking business). Vaidyanathan laughed and, with mock seriousness, said he would set up his own bank.
His songs are not exactly melodious for the listeners, but he has been trying hard, and one day, he will probably be a good singer. It’s just that Vaidyanathan pushes himself and others hard to achieve a goal. Kamath introduced retail banking in India. Will his protégé succeed in creating a pure-play retail bank?
He tells his friends: “My singing is not bad! It’s pretty good by now!”
Some of his friends say Vaidyanathan wants to be a social reformer, but they won’t reveal anything beyond this. Let’s wait and watch.
Excerpted with permission from Tamal Bandyopadhyay’s Roller Coaster: An Affair with Banking published by Jaico Publishing House
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