Infra sector problems influenced IDFC to become a bank, says Vikram Limaye

As NSE chief, he said most important task is to address regulatory issues that institution is facing

After a stint of more than 12 years at the top position in the IDFC group, Vikram Limaye will move to the National Stock Exchange (NSE) next week as its chief executive. Limaye, respected as an institution builder with the ability to think strategically and having strong people skills, spoke to Abhijit Lele about the rich experience he has gained at IDFC and his priorities for the country’s top stock exchange. Edited excerpts:

NSE’s image has taken a beating due to a spate of unfortunate events. How do you look at its current state of affairs?

It is an institution of national importance to support economic growth. The exchange is passing through challenging times. There are certain regulatory issues that have to be dealt with.

You will take over as the NSE’s chief executive in the next few days. What priorities have you set for work at the exchange?

The most important task is to address regulatory issues that the institution is facing. Second is to stabilise people and strengthen systems and processes for effective working. Third is working on listing of the NSE to give liquidity (exit route) to investors after regulatory issues are sorted out. However, I can't give a timeline for an IPO (initial public offering).

Does the exchange need an overhaul of its systems and management structure?

I would not like to comment on this matter now. I will deal with these aspects after understanding the issues in detail.  

Besides the BSE, the Metropolitan Stock Exchange is also gearing up for action. How does that work for the NSE?

The exchange has coexisted with others players for long and will continue to coexist.

You have been associated with IDFC for more than 12 years. How has it evolved?

When I came in 2005, IDFC was a small-project finance company with management challenges. The mandate was to take it public in six to 12 months. It has grown to become a robust organisation working as a catalyst for private sector participation in infrastructure development of the country. Now, it is a well-diversified financial sector conglomerate with a bank, an asset management company, private equity and infrastructure finance NBFC (non-banking finance company) and investment banking arms, among others.

What was the most challenging phase during your stint at IDFC?

Problems arose when the infrastructure sector faced headwinds in project execution, delays in getting various clearances and cancellation of licences. Growth prospects suffered due to factors beyond the control of the organisation.

Were there any disappointments due to this?

There were two disappointments. We have a huge shortage of infrastructure in the country; there was huge liquidity in the system worldwide. We could have used it (money from abroad) to build robust infrastructure (in India). That did not happen, impacting the country’s growth potential.  It also affected the growth prospects of IDFC.

Did that trigger the thinking to transform into a bank?

It was one of the factors that influenced the thinking about becoming a bank. It (IDFC) was a non-banking finance (company) with a mono-line product (infrastructure funding). Having a large finance company with wholesale funding was not deemed to be a stable structure in the long term.

How have systems and ethos built over a period at IDFC?

We have tried to build a culture of excellence with sharp focus on execution in spirit of stewardship.

How do you read the bank’s readiness for growth? What would be the fate of its other subsidiaries, like mutual fund, investment banking and broking?

Building a banking institution is a long-term activity. Inorganic route is important to build a retail franchise quickly. As for the other businesses in the group, they have stable management teams with growth strategies that are well under execution.