Discussing the possible contenders for the top job, Diwanji said experience within the bank could help, but it should not be the deciding factor. “It’s an 80-20. Familiarity is 20, 80% is ability to deal with a crisis situation and turn the bank around,” he said.
Diwanji said HDFC Bank is going through a major merger process and needs a leader who can address pressure on its liability side. The bank has a low-cost asset base, largely supported by the mortgage book of HDFC Bank and HDFC Limited, but its cost of deposits has increased due to higher interest rates and migration towards systematic investment plans.
“How do we make sure that kind of holistic banking is brought into, where the liability side is propelled?” he said, highlighting the need to strengthen deposit mobilisation and improve the bank’s liability franchise.
Diwanji acknowledged that HDFC Bank has made progress on the institutional side, including securing Foreign Currency Non-Resident Bank (FCNRB) deposits. However, he said the key test for the next leader will be whether such corrective measures can create stronger and more consistent liability growth.
On the Tata Sons listing issue, Diwanji said the group’s biggest legal argument could be that Tata Sons does not qualify as a non-banking financial company (NBFC). He said that if the RBI has rejected its application, Tata Sons may have to approach the High Court within 30 days.
However, he pointed out that the company cannot simply challenge the possible loss of control or shareholding. The appeal would have to focus on issues such as natural justice or whether the RBI properly applied its mind.
“The only possibility that they have is to say on natural justice: is equity out of public funds or fungible funds really a public deposit-taking activity of a CIC?” Diwanji said.
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He argued that equity investments made by Tata Group companies may not qualify as public deposits, as the broader regulatory definition is more closely linked to debt. Tata Sons could therefore question whether such investments should bring it under the listing requirement.
Diwanji also said value unlocking is not the central regulatory question. While listing could release capital and unlock value for shareholders, the key issue is whether Tata Sons qualifies as an NBFC and is consequently required to list.
