Uday Kotak, BFSI News, ET BFSI
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“Indian banks saw it happen in front of them. It’s a wake-up call for Indian banking. Wake up or you will see large parts of traditional financial markets move out,” said Uday Kotak, MD & CEO of Kotak Mahindra Bank, at a discussion at the Infinity Forum, organised by Bloomberg and IFSCA.
Bankers were shortsighted over the last three years and they let the payments market be taken over by two or three players. Their standard response was there is no money in payments, he said, adding that however, consumer tech have revenue models which are outside finance, for example, advertising or e-commerce models.
“Banks under Section 6 of Banking Regulation Act cannot get into non-financial business as defined. There are serious issues about how we are going to draw the line. Simultaneously there is an issue about financial stability,” he said, adding that in the name of better competitive service there should not be any systemic and stability challenge.
On payment companies raising deposits on the behalf of banks, he said the issue really is who is raising the deposits. “Is it the consumer tech companies, which are the front end and who are going to the customers, marketing the deposits and risking the underlying asset? We need to make sure that as we grow into fintechs, we do not betray trust. The most important aspect is consumer trust that has to be protected at all costs.”
MSME lending
On MSME lending, Kotak said the time has some sort of transformation in MSME lending, particularly the turnaround times.
He said the power of data can give a Msme clarity on loans in minutes if not seconds. MSMEs should be able to get to know if they will get money in a day rather than the few weeks they have to wait now. He said GST is an extremely powerful tool, which needs to be leveraged and democratised. “While you protect privacy you need to make data available with consent and work on that with speed.”
On NRI banking
Stressing the need to bring NRIs and PIOs under UPI, he said NRIs have to go through a lot of friction for opening an operative account in India.
“NRIs should be able to do all their transactions at the offshore centre and we must build that with speed.”
Identifying tech, talent and customer as three key components for the Indian financial system to get into the new age, Kotak said the focus has to be on the customer, with technology being the translation and talent the translator.
“We need to have a sales and service oriented and customer-first approach and all the solutions at the click of a button,” he said.
On Gift City, he said it should be built on the lines of London, Dubai, Singapore. There should be a united approach to regulation and policymaking cutting across all regulators.
Digital-only banks
On digital-only banks, he said the current policy doesn’t stop anyone from setting up digital-only banks. only it needs fit and proper and appropriate people setting up the bank. The time has come for some entrepreneurs to make an application to RBI for a digital-only bank, he said.
He said Kotak Mahindra Bank was excited about the digital space and was focused on creating start-ups within the organisation, a different culture, a squad approach and letting these start-ups have their power of imagination and execution. “We are hiring appropriate talent and giving them the ability to go ahead and experience in the financial world even if there are some risks. What we are not compromising is on security and regulation,” he said.
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