Naina Lal Kidwai, the new CEO elect of HSBC India, has been told by domestic regulators to give up her non-executive seat on Nestle's board due to conflict of interest concerns.
Despite heavy industry criticism, the Reserve Bank of India has stated that Naina Lal Kidwai must give up her boardroom position at the European food giant or it will not give the approval necessary for her to take up the HSBC role.
The Indian authority’s justification is the concern over a conflict of interest. It is worried that as Nestle has an Indian subsidiary, Ms Kidwai could theoretically be in a position to lend money to a company she is involved with.
However dissenting banking industry figures have suggested that giving special dispensation if no credit agreement exists between the companies involved is allowed. They added that the RBI should be taking a more liberal stance for the benefit of India’s wider economic development.
Additionally, Ms Kidwai’s supporters have pointed out that the RBI’s stance would rob India of the prestige of having its first executive on the board of a Fortune 100 company.