Uday Kotak, Executive Vice-Chairman and Managing Director, Kotak Mahindra Bank, has said that over the next five years, private sector banks' marketshare will go up significantly to be on par with that of the public sector banks.
In an exclusive talk with Zee Business's Anurag Shah, Kotak reveals the factors that give him the confidence about the prospects of a bright future for private banks in India.
Q: At present, the market share of private bank and public sector banks is in a ratio of 30:70. What is the thing that gives you the confidence that private sector banks will grow at a fast rate in India?
A. Three issues are there that give me the confidence to talk like that and they are 1) industry structure between Private and Public sector banks, 2) financial savings of people and 3) digitisation of the process involved.
In terms of financial savings, people have shifted their habits investing in gold and real estate to financial assets. In addition, technology has brought financial liberalisation to small depositors, credit card holders and those who seek small or personal loans.
In addition, if we talk about incremental growth than entire growth in loans is happening in the private sector banks. Their share is growing pretty significantly and is almost equal to the levels of growth witnessed in public sector banks.
Q: Can you name the untapped pockets or sectors where the private sector banks can grow? Interestingly, your bank's theme is Kona Kona Kotak. Are you reaching there?
A. Yes Kona Kona growth ki opportunity hai (There is a chance of growth on every corner). If chosen in a right way then opportunities are there to lend in different pockets like retail loans, commercial loans and corporate loans along with small business loans.
At present, the micro-India economy has grown at a good pace in past three years, which provides a combined opportunity to grow.
Q: Credit growth in India is about 10-11 per cent and we are talking about taking it to 14-15 percent. Do you think that this figure of 14-15% is reachable or it would take a few years to reach it?
A. I feel credit growth of 11-12 percent will help the private sector banks to increase their share in the market. If I talk about Kotak and other banks similar to ours than it can register a growth that can be two times of the nominal growth of the country. Nominal Growth means Real GDP + Inflation.
Q: Do you think that certain events at public sector banks in the recent past would have eroded people's faith in them? Will it help in building up their confidence in private banks?
A. I feel every bank, may it be a public bank or a private bank, will have to improve its risk management system, and any failure can create adverse situations for any bank. Improvement in Risk Management is only a key to growth for both banks.
Q: Discussions are there that the Public Sector Banks should be privatised at the earliest. Do you agree with the idea of privatisation or you feel that they should be reformed?
A. I feel, no privatisation will happen till 2019 general elections. Consolidation between the public sector banks is a good idea.