Narayanan Vaghul
India
Narayanan Vaghul
  • Former Chairman, ICICI Bank Limited (Finance)
Born Chennai, India, 1936. Bachelor of Commerce (Hons) Degree, University of Madras (now known as Chennai), 1956.
“We have to take the banking to the rural masses; this is the way in which it has to be done.”

Summary

In this interview, Narayanan Vaghul, former chairman of ICICI Bank Limited—also known as the Industrial Credit and Investment Corporation of India—narrates his journey to becoming one of the most prominent figures in the Indian banking industry. He describes how, early in life, he aspired to join the Indian civil service, but how serendipitous circumstances instead pulled him in the direction of the State Bank of India, where he would serve for 19 years. Vaghul reflects on some of his most important mentors during those years, who instilled in him the principles of humility, respect, and confidence—virtues that continued to serve him throughout his career.

After moving from a regional branch of the State Bank in Chennai, to the central office in Bombay, Vaghul encountered another fortuitous bend in the road. He took a sabbatical at the National Institute of Bank Management (NIBM), and after only two years there, had made such an impression for his hard work and diligence that he was offered the position of director of the institute. In this new role, he continued to stand out for his intellect and analytical problem-solving. Indeed, by the age of 39, he was offered the position of executive director of the Central Bank of India, where he served for only a few years before being appointed Chairman and Managing Director of the Bank of India in 1981—the youngest appointee in the bank’s history at the age of 44.

Vaghul goes on to describe how the nature of the banking industry changed over time since he started his career in 1950. He explains that, at that time, “the banking reputation was very high, banking business was considered to be very safe. Even one loan becoming sour was a major issue for the bank—you were not supposed to let even one defaulter remain in the bank.” Things changed with the nationalization of banks in 1969, which had “the avowed objective of taking banks to the masses—from class banking… to mass banking.” At that time, Vaghul was still starting out his career at the State Bank, but he recalls how he believed in that agenda, and how he, along with his mentor Mr. Talwar, decided to finance cooperative banks, which would in turn lend to farmers. Although he believed in the underlying agenda, Vaghul also describes his frustrations at government interference in bank management after the nationalization, and provides insights into how he navigated this period.

In 1985, Vaghul left Bank of India for a position at ICICI Bank Limited, one of three major development banks in India at that time. Founded in 1955, it was full owned by the government and its mission was to lend to private sector industries. In the interview Vaghul describes some of the challenges he faced in this new role, including navigating the license raj and interacting with government officials, as well as selecting viable projects to receive loans. He also explains the factors that motivated him and others to launch a commercial arm of the bank in 1993, which operated in parallel to the original development bank until 1999-2000, at which time the two were merged.

Vaghul concludes the interview by discussing his management practices at ICICI Bank, and particularly his gender neutral hiring policy that made the bank a haven for women employees. He also reflects on his philanthropic activities in the areas of education, research, and fostering innovation and development.

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In this interview, Narayanan Vaghul, former chairman of ICICI Bank Limited—also known as the Industrial Credit and Investment Corporation of India—narrates his journey to becoming one of the most prominent figures in the Indian banking industry. He describes how, early in life, he aspired to join the Indian civil service, but how serendipitous circumstances instead pulled him in the direction of the State Bank of India, where he would serve for 19 years. Vaghul reflects on some of his most important mentors during those years, who instilled in him the principles of humility, respect, and confidence—virtues that continued to serve him throughout his career.

After moving from a regional branch of the State Bank in Chennai, to the central office in Bombay, Vaghul encountered another fortuitous bend in the road. He took a sabbatical at the National Institute of Bank Management (NIBM), and after only two years there, had made such an impression for his hard work and diligence that he was offered the position of director of the institute. In this new role, he continued to stand out for his intellect and analytical problem-solving. Indeed, by the age of 39, he was offered the position of executive director of the Central Bank of India, where he served for only a few years before being appointed Chairman and Managing Director of the Bank of India in 1981—the youngest appointee in the bank’s history at the age of 44.

Vaghul goes on to describe how the nature of the banking industry changed over time since he started his career in 1950. He explains that, at that time, “the banking reputation was very high, banking business was considered to be very safe. Even one loan becoming sour was a major issue for the bank—you were not supposed to let even one defaulter remain in the bank.” Things changed with the nationalization of banks in 1969, which had “the avowed objective of taking banks to the masses—from class banking… to mass banking.” At that time, Vaghul was still starting out his career at the State Bank, but he recalls how he believed in that agenda, and how he, along with his mentor Mr. Talwar, decided to finance cooperative banks, which would in turn lend to farmers. Although he believed in the underlying agenda, Vaghul also describes his frustrations at government interference in bank management after the nationalization, and provides insights into how he navigated this period.

In 1985, Vaghul left Bank of India for a position at ICICI Bank Limited, one of three major development banks in India at that time. Founded in 1955, it was full owned by the government and its mission was to lend to private sector industries. In the interview Vaghul describes some of the challenges he faced in this new role, including navigating the license raj and interacting with government officials, as well as selecting viable projects to receive loans. He also explains the factors that motivated him and others to launch a commercial arm of the bank in 1993, which operated in parallel to the original development bank until 1999-2000, at which time the two were merged.

Vaghul concludes the interview by discussing his management practices at ICICI Bank, and particularly his gender neutral hiring policy that made the bank a haven for women employees. He also reflects on his philanthropic activities in the areas of education, research, and fostering innovation and development.

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Additional Resources

Additional Resources

Interview Citation Format

Interview with Narayanan Vaghul, interviewed by VG Narayanan, October 26, 2018, Creating Emerging Markets Project, Baker Library Historical Collections, http://www.hbs.edu/creating-emerging-markets/.