Naina Lal Kidwai, CEO of Hongkong and Shanghai Banking Corp in India, is likely to step down from the global board of Nestle SA.
The Reserve Bank of India is insisting on this as a precondition to its approval of her appointment as the HSBC head.
Even though Kidwai was appointed successor to former HSBC CEO Niall Booker in May, the RBI has not given its nod to her appointment as it sees a conflict of interest in her holding dual positions.
An official spokesperson of HSBC said, "the bank would abide by the regulator's stance, and comply with all regulatory requirements."
However, there was at least one instance of a CEO of a financial intermediary holding a board position in a company, banking sources said. The banker was allowed to hold the board position by the RBI with the rider that his bank would not have any lending exposure to the company, the sources added.
Kidwai happens to be the second Indian to be on the board of a Fortune 500 company. Srikant M Datar, the Arthur Lowes Dickinson professor of business administration at Harvard University, is on the board of directors of Novartis AG.
Kidwai joined as vice-chairman and managing director of HSBC Securities and Capital Markets India in November 2002, after an eight-year stint with JM Morgan Stanley.
In July 2004, she was made Niall Booker's deputy, and finally in May this year was appointed CEO of HSBC's India operations.
Earlier, the RBI had forced HSBC to pare its stake in UTI Bank. HSBC had bought over 14 per cent stake in UTI Bank, but could not get the RBI's nod for the deal as the stake holding pattern in private banks did not allow another bank to hold more than a 5 per cent stake. Subsequently, HSBC sold a part of its stake in UTI Bank.
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