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Harkirat Singh, one of the promoters of the private bank proposed to be set up in partnership with Rabobank of the Netherlands, has withdrawn from the partnership. The bank was slated to start operations by August.
On January 31, 2002, the Reserve Bank of India had granted approval in principle to three professionals--Ashok Kapur, Harkirat Singh and Rana Kapoor--who had teamed up with Rabo India to set up a commercial bank.
Singh's withdrawal from the proposed bank is a result of a conflict of ideas among the three professionals. In a press release, Singh said the developments in the recent past had convinced him that there was no longer a complete alignment of the vision of the promoters.
He also alleged that during his absence, Rabobank in consultation with the other two partners had decided to appoint Kapur as the executive chairman and CEO.
"This decision is further evidence of a lack of mutuality of the objectives of the bank as envisioned by me. I have, therefore, decided to withdraw as a promoter of this new banking company," Singh said.
However, Kapoor said, "We have already discussed the issue with all the constituents involved. The bank is being implemented in accordance with the existing schedule." He said Singh had resigned from the project for personal reasons, and the Indian partners and Rabobank highly valued his contribution.
Singh's exit as a promoter may not lead to cancellation of the licence granted to the bank in principle. A source in the RBI said the central bank would consider fresh details of the proposal before taking a final decision.
The remaining promoters of the bank along with Rabobank have planned the initial capital requirements of the bank. The approval granted by the central bank was valid for a year to enable the applicants to mobilise the Rs 200 crore (Rs 2 billion) start-up capital and to fulfil other conditions. The RBI had given a six-month extension for the new bank to start.
Rabobank acquired full control of Rabo India earlier this month by buying out the 25 per cent stake of its local partners, Kapur, Singh and Kapoor. It also injected $25 million into the Indian operations. Kapoor is the managing director and CEO of Rabo India.
Singh resigned as the non-executive director of Rabo India in March. He had joined Rabobank in 1999 and was special adviser to the managing board of Rabobank International, based in London.
In 2000, he was appointed general manager of the London branch and the country head in the United Kingdom. In 2002, he was made the global head of capital markets. In November 2002, he was transferred to India as the CEO and managing director-designate of the new banking project to implement it, Singh said.
In the press release, he said, "My vision was to promote a bank where I could bring in my ample experience and professionalism, both in India and overseas, to create an institution whose core principles were complete transparency and was driven by impeccable value systems."