Category: Banking & Finance

Veteran banker Uday Kotak has said his bank will not shy away from taking bolder bets and will shift its approach significantly to “one of greater aggression” even as he exhorted lenders to focus on sustainable growth and not get swayed by short-term quarterly results.

“The industry also needs to stop postponing the inevitable and kicking the can down the road. Upfront action with an eye on enduring, sustainable growth, not swayed by quarterly, short-term results is a must for the future of a healthy Indian financial sector,” Kotak, the managing director and chief executive officer of Kotak Mahindra Bank said in a message to shareholders in the annual report.

For the financial sector, the disproportionate importance of risk management has come to the fore, Kotak said, adding “The ability to price risks well and having superior underwriting skills is core to the success of a financial services institution.”

Kotak’s comments come at a time when the pandemic has triggered concerns around the asset quality, though the RBI has expressed some relief after seeing lower than expected impairments.

Kotak Mahindra Bank

Kotak said his bank remains focused on building a world-class financial services institution that will deliver long-term sustainable returns for all its stakeholders. For that, he said, the bank will shift its approach significantly to “one of greater aggression”.

“We will not shy away from taking bolder bets. We have a deep conviction in the India growth story and confidence in our risk management capabilities,” he noted.

“We believe the time is right to experiment more, concentrate on segments that we deem offer the best opportunities for returns, he said, reiterating that it will not deviate from its template of risk-adjusted returns.

“Today, we have a much lighter balance sheet and with sufficient capital in our hands, we are ready to grow substantially faster, but on our terms,” he said.

The bank will make higher investments in strengthening our digital and technology platforms and offerings, he said.

“What was once a support function to business, is now the epicentre around which our businesses will revolve,” he said.

India in the Never Normal

Kotak said the pandemic has changed the way consumers and businesses will function. “2020 was a year unlike any that we have seen. And while 2021 brings with it a fair degree of hope and optimism, I believe that we must embrace living in a world where the new normal and never normal coexist,” he said

According to Uday Kotak, India is currently at the same stage as it was in 2003 when it was at the cusp of an investment cycle, and that physical and social infrastructure will be the growth driver for the country.

The veteran banker said the country needs to invest significantly more and move closer to the 3 per cent of GDP mark in healthcare investments over the next 3-5 years.

We are transitioning to a world where ‘location’ will be increasingly irrelevant, but need to redouble efforts in education, Kotak said.

Stating that the future belongs to the educated and skilled, he said, “We have to make structural changes in our educational system to improve the quality of education imparted, invest in teachers and upgrade teaching infrastructure.”

When it comes to digital and technology, we have leapfrogged five years within the span of a year, and there will be some rebalancing when we revert to more in-person interactions, he said, making it clear that there is no going back completely.

Inclusive growth

Stressing the need to redefine priorities, he said, “Growth cannot be just for a select few. Inclusion is our responsibility as well as a business imperative. There will be a premium on sustainable growth. Growth that is inclusive and that takes into account the environment, is socially responsible and scores high on governance and ethics.

Doing good and doing well go hand in hand.”

He also acknowledged that the pandemic has created inequalities in society and sought interventions on this front.