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Pulling off Big Feats
by Sticking
to the Basics
...and
the award goes to
BUSINESS
LEADER UDAY KOTAK Executive Vice-chairman,
Kotak
Mahindra Bank
Uday
Kotakperformeda Herculean task last year -convincing the stodgy
Reserve
Bank of India that amalgamation of two healthy banks also
makes
sense, and not just regulator-blessed shotgun marriages of banks
in
distress with healthy ones, which was the norm.
That's
why he is ET Business Leader of the Year. Kotak, in his lifetime
as an
entrepreneur, has achieved a lot -from advising industrialists like
Adi
Godrej and Analjit Singh on takeovers that grew businesses to
safeguarding
his baby from many a financial storm. But the $2.4 billion
acquisition
of ING Vysya may well be the brightest jewel in his crown,
which
many others had also eyed.
“I was
delighted to receive the mail (about the award),“ said Kotak.
“It is
a great feeling, especially coming from a high-quality jury .
I am
delighted and honoured. I just feel that it is a significant responsibility .
It is
also about the responsibility to be an ambassador.
The
whole ING Vysya deal was to build capacity to serve India.
India
is at a crucial juncture. A lot of things in India are getting right.
It is
a marathon.“
Most
are likely to agree that banking has been the most difficult business
in
this country for the past few years. Several banks, both private and
state-run,
have piled up huge amounts of bad loans due to defaults.
But
Kotak Mahindra Bank has been trouble-free. Not that Kotak had a
magic
wand but he had the common sense to not lend to businesses
where
entrepreneurs did not have their skin in the game, and resisted
the
temptation to make a quick buck.Restructured loans were at 0.24%
of advances,
and net bad loans were at 0.92% last fiscal year, when the
combined
figure for the in dustry was more than 10%. The icing on the
cake
was that there was no debt restructuring and sale of non-performing
assets
to reconstruction companies. Not many can boast of such a balance
sheet
in the industry.
Ten
years ago, when the Reserve Bank permitted the non-banking
finance
company to become a bank, several critics thought it would
fail
to make the transformation and compete with the likes of HDFC
Bank
and ICICI Bank. Kotak, however, proved them wrong.
Long
before many realised that the days of exotic finance were over,
he
figured out that he needed to stick to the fundamentals that underpinned
the
brick-and mortar model of banking while wholeheartedly embracing
technology.
RBI
governor Raghuram Rajan may be giving signals that some of the
numbers
from the banking industry may be suspect because of accounting
practices,
but Kotak has shunned even the regulator-permitted accounting
changes
that glossed over stress. His bank set high standards for disclosures.
Even
when the Reserve Bank of India permitted banks to transfer bonds to
the
held-to-maturity category to avoid mark-to-market losses,
Kotak
Mahindra did not do so and sacrificed an opportunity to boost
net
profit by around `167 crore.
It was
the first bank to disclose its entire exposure to currency derivatives
when
the 2008 credit crisis resulted in many reneging on contracts.
No
wonder investors have always paid a premium to own Kotak Mahindra Bank.
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ET19OCT15
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