NEWSMAKER: VP Shetty

The rescue mission man

V P Shetty

Last year, Industrial Development Bank of India (IDBI) chairman and managing director Vaddarse Prabhankar Shetty held an offsite meeting with employees of IDBI Bank at Retreat, a resort in Madh Island, Mumbai. The idea was to make them an integral part of IDBI's growth story. His predecessor M Damodaran had transformed the term lending institution into a commercial bank and merged IDBI Bank with itself. However, it was left to Shetty to make the integration process a success. Both the finance ministry and Reserve Bank of India (RBI) felt that he would do a good job.

Which is why he was hardly four months into his assignment as the boss of Canara Bank in Bangalore when he was flown to Mumbai to head IDBI.

Shetty did not disappoint them. The offsite meet was followed by a comfort letter to every employee, assuring salary protection for three years "" even a liberal voluntary retirement option to anyone unhappy with the changes. Shetty held another Retreat meeting with IDBI Bank executives to lay down a 12-point agenda, discuss it, and seek suggestions. Once it was accepted by all, Shetty made sure that there was no deviation from the path. This is quintessential Shetty "" a boss with a personal touch, but a ruthless disciplinarian too. "He is process-driven and meticulous in approach, but cannot stand fools," says a banker who knows him well, "That is why at times he is misunderstood as arrogant."

Bankers have been surprised by RBI's decision to award United Western Bank to IDBI, but few who know Shetty are not confident he is well suited to the rescue mission. "Frankly, IDBI was the fittest candidate, even though nobody took it seriously," assesses a banking consultant, "Apart from being the highest bidder, IDBI also has valid reasons behind the bid. Moreover, it has integrated the bank with itself rather well."

As a banker, Shetty's record is impressive. He started his career at Canara Bank in 1968, but left for Vijaya Bank after four years. In October 1999, he was made the executive director of Kolkata-based Uco Bank, which was riddled with union trouble, 11 years of losses and calls for its closure. Shetty was made the chairman in January 2000. Uco made a meagre net profit of Rs 36 crore in FY00, which grew to Rs 207 crore in FY03. Shetty pressed for growth, even removing chairs from the bank's branches to prod employees into the field to look for business and recover sticky assets. By October 2003, the turnaround was a stunner "" even as Uco made a sparkling BSE debut.

At IDBI, a project lender since inception, it's a different ballgame. How has his scorecard been here? "He does not have expertise in project lending, but that has not hampered the institution as it is repositioning itself to focus on retail and short-term loans. He is very strong on numbers, and knows corporate India extremely well. He always plays on his strong points and cements his weaknesses with a personal touch," says an IDBI insider. The acquisition of United Western presents him with yet another challenge.