Uday Kotak asserted that Kotak Mahindra Bank will not shy away from taking bold bets on the back of its conviction in the India's growth story and its risk management capabilities.
Banker Uday Kotak on Thursday asked lenders to not get swayed by the urge to post healthy performances by deferring recognition of stress formation in the books. Kotak Mahindra Bank will not shy away from taking bold bets on the back of its conviction in India's growth story and its risk management capabilities, the lender's managing director and chief executive said in a message to shareholders in the annual report.
It can be noted that lenders have been blamed in the past for delaying asset quality hit recognition, which ultimately blows up into system-wide issues. The comments come at a time when the pandemic has triggered concerns around the asset quality, but the RBI has expressed some relief after seeing lower than expected impairments. Kotak said the disproportionate importance of risk management has come to the fore for the financial sector, and the ability to price risks well is core to success.
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, he said. Exuding confidence in the bank's own abilities, Kotak said the bank headed by him will be aggressive in its play.
The city-headquartered bank will experiment more and concentrate on the segment, offering the best 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 added.
According to 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 percent 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. We have to make structural changes in our educational system to improve the quality of education imparted, invest in teachers and upgrade teaching infrastructure, he noted.
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.
He also acknowledged that the pandemic has created inequalities in society and sought interventions on this front. Kotak, who had announced that he will be foregoing salaries in FY21, took home Rs 1.51 crore, which was incentives for past years' performance, while joint managing director Dipak Gupta's emoluments totalled up to Rs 4 crore.
The annual report said Kotak's remuneration was 31.53 times the median salary of the lender, while the same for joint managing director Dipak Gupta was 79.90 times, whole-time director K V S Manian 82.79 times and Gaurang Shah 82.63 times.
First Published: IST