Ever since the Yes Bank fiasco, there has been ample mistrust in the financial system. A significant slowdown in the financial space can cause a systemic risk. Hinduja Group chairman, Ashok Hinduja agrees that since the IL&FS issue, there has been a liquidity crunch for NBFCs. On one hand, the economic growth has taken a hit, whereas, on the other, corporates have stopped expansion altogether.
Amidst this entire hullabaloo, Ashok Hinduja blames speculators for harming a healthy institution. Failure of a few corporates has led to a lot of speculation, and that’s exactly what happened with IndusInd Bank as well, believes Ashok. However, with abundant financial resources, the chairman of Hinduja Group says that they are completely backing IndusInd Bank even though it does not require capital for the next two years.
A regulatory filing related to a pledge created a few years back with Citibank also led to panic recently. Clarifying the situation, Ashok says that in the year 2016, they picked up some stake in MauBank of Mauritius and to pay for that, they pledged some shares. Unfortunately, the sale never happened due to pricing issues. Nonetheless, they are still on a lookout for more such opportunities so that the Mauritius-incorporated IndusInd International Holdings (IIHL), the promoting entity of IndusInd Bank, becomes an operating firm.
Talking about other investments, Ashok Hinduja has clearly refused to invest in Yes Bank as the opportunity does not interest him. Since they already have a bank (IndusInd), they’re going to be just a mere participant if they invest into another bank. Having said that, he encourages other investors to grab this opportunity. He believes that investing into Yes Bank at the price decided upon is a good buy for someone looking at a three to four years horizon.
But, with the fall of Yes Bank, there is a worry that flight of deposits could happen in private banks. In such a case, Ashok credits the regulator for giving several statements to dispel fear amongst depositors. He further adds that all governments ultimately want both public as well as private sectors to exist together, which is why, they also opened up licenses. While there could be some delay, the depositors’ money is safe.
Another investment that Ashok Hinduja dropped out of was Jet Airways. He said that when Etihad approached to partner with them, they were clear that aviation was not their forte but still went ahead and looked into it. And, when they did, they found out that several protections and dispensations were not there, which led them to back out.
It’s no news that the Indian economy has taken a hit in the recent months. Talking about the government taking steps in the right direction, Hinduja Group chairman Ashok says that it is important to keep in mind that even though the economy has taken a hit, a lot of clean-up has happened in the system and there is stress on good governance as well as processes. He believes that what the government has been doing is absolutely right. The Prime Minister has brought in a lot of new ideas in various sectors and there’s more transparency, believes Ashok Hinduja. He thinks that the future is great for India, however, it’s only a matter of time.
With the corona virus scare globally, all businesses are being majorly impacted, which could also disrupt the global supply chains. Ashok Hinduja, too, believes that the lockdown measures taken by the governments will definitely have an impact on businesses. People have stopped travelling and businesses across sectors are suffering. All of this is definitely going to affect the economy, says Ashok.
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