Flipkart co-founder Sachin Bansal has resigned from the board of Ujjivan Small Finance Bank after a company he owns sought a banking licence from the Reserve Bank of India.
Bansal resigned as an independent director with effect from Monday, the small finance bank informed stock exchanges. He had joined the board on June 1, 2019, according to the bank’s annual report.
“Given an entity owned and controlled by me has made an application to the RBI for a universal banking license, I felt it was — in the interest of propriety and corporate governance — only appropriate that I stepped down from this role,” Bansal said in his resignation letter.
“There are no other material reasons for my resignation as an independent director of the bank,” he added.
Bansal’s banking plan came to light earlier this month when International Finance Corporation said it would pick up a 4.5% stake in Navi Technologies Pvt. Ltd, his main investment vehicle, for Rs 210 crore ($30 million). The investment values Navi—currently almost entirely owned by Bansal—around $660 million.
A bank would be the natural extension for Bansal after he decided to acquire non-banking financial company Chaitanya Rural Intermediation Development Services Pvt. Ltd late last year in his biggest bet since quitting Flipkart. Bansal had agreed to invest Rs 739 crore (about $104 million) in Chaitanya Rural and take charge as its CEO.
Navi, previously known as BAC Acquisitions Pvt. Ltd, now plans to take over Chaitanya Rural from Bansal. The banking application was filed by Chaitanya Rural unit Chaitanya India Fin Credit Pvt. Ltd. The non-bank lender currently provides loans to low-income customers in rural areas largely on the joint-liability-group lending model.
The banking application shows Bansal’s intent to build a financial services group. Previously, he has made debt or equity investments in companies such as Kissht, Lendingkart Finance Ltd, Northern Arc Capital Ltd and IndoStar Capital Finance Ltd. Bansal is also acquiring Essel Mutual Fund and DHFL General Insurance Ltd from Wadhawan Global Capital. He had also invested Rs 650 crore in ride-hailing company Ola last year.
Bansal, one of the poster boys of India’s startup community, had started Flipkart along with Binny Bansal in 2007 and sold it to Walmart Inc. at a staggering valuation of almost $21 billion. Ever since, he has been deploying the $1 billion he got by divesting his own stake in Flipkart to invest in financial services or fintech companies.