Vaidyanathan is the inaugural Managing Director and CEO of IDFC First Bank, which was founded in December 2018 following the merger of Capital First and IDFC Bank.
Vaidyanathan has over two decades of experience in the industry and is a graduate of Birla Institute of Technology and Harvard Business School. From 1990 to 2000, he worked for Citibank Consumer Banking before establishing retail banking and expanding its branch network from 2000 to 2009. Vaidyanathan was appointed to the board of ICICI Bank in 2006, at the age of 38. He was appointed MD and CEO of ICICI Prudential Life Insurance Company in 2009.
He left ICICI Bank in 2010 to acquire an NBFC and convert it into a bank focused on consumer and MSME lending. According to the IDFC First website, after acquiring equity shares, he leveraged the platform to establish MSME and consumer financing businesses. By 2018, the loan book has expanded from a start-up to Rs 29,600 crore, more than doubling the market valuation. Between 2013 and 2018, Capital First grew at a loan growth rate of 30% and a profit growth rate of 55%.
Vaidyanathan decided to unite Capital First with IDFC Bank in 2018 in order to obtain a commercial banking licence.
Throughout his career, Vaidyanathan has received numerous awards, including ‘Most Inspirational Leveraged Management Buyout, India 2018’ from CFI Awards, ‘Entrepreneur of the Year’ at the Asia Pacific Entrepreneurship Awards 2017, ‘Transformational Leader 2018’ from CFI Awards UK, and ‘Outstanding Contribution to Financial Inclusion, India, 2017’ from Capital Finance International, London. The company was listed in Business Today’s ‘India’s Most Valuable Companies 2016 & 2015’ and Dun & Bradstreet’s ‘India’s Top 500 Companies & Corporates 2016 & 2015’. Vaidyanathan was also selected to Business Today’s list of “Leaders Under 40” in 2009.
How to deal with the situation where banks are focused on retail?
If you look at the Indian banking system as a whole, there are a lot of rules and restrictions imposed. Such as location restrictions, municipality restrictions, co-borrower conditions, reference conditions, age restrictions, tenure conditions, collateral restrictions, banking normas, legal norms, technical clearance requirements, FIR requirements, and so much more. Therefore, only a small pool is left for the banks to go after, making it very competitive since every rule and regulation is like an exclusion.
In order to make the best of the situation, the banks should play in the prime segment since there is a large opportunity that is left behind every rule. There is an opportunity for every bank in the proprietary segment
Commercial credit exposure
Historically, large corporations had access to most of the credit in our country, and small corporations also had access to Equity markets, Bonds, ECB, etc.
Personal credit to GDP which is also known as consumer credit is only 14.5% of the total GDP of India.
Household credit at 37.7% for India, includes individuals, proprietary concerns, partnership firms, NGOs, personal loans, finance and certain parts of the country.
Personal credit at 14.5% refers to personal credit available by individuals for the purchase of personal items like homes, cars, two-wheelers or personal loans.