Uday Kotak, 44, executive vice-chairman and managing director of Kotak Mahindra Bank, has an open mind on roping in a partner for the bank even though no plan to do so exists "right now".
Nor does he rule out growth through acquisitions, though Kotak hastens to add that he is "not working on any deal" at the moment.
In a free-wheeling interview with Business Standard, the head of the newest new private sector bank, talked about his plans for the bank. Excerpts:
When do you plan to kick off operations?
This is for the first time that an existing company is being converted into a bank. There are certain processes to be followed, like moving the registrar of companies for changing the name from KMFL to Kotak Mahindra
Bank.
It will take a few weeks. We are holding a board meeting next week. We have not zeroed in on the zero date but certainly the banking operations will start before the end of the fiscal year.
Since an existing firm is being converted into a bank, give us some idea about the size of the bank.
KMFL currently has deposits of Rs 200 crore (Rs 2 billion) and a customer base of one lakh (100,000). The total customer base of the group is five lakh (500,000). All our existing 30 branches spread over about 20 locations will have to be relocated to more prominent places. We will not have to apply for fresh branch licences now as the Reserve Bank of India has allowed us to convert all the existing branches into bank branches.
What will be the business focus of the bank?
The bank will have a combination of retail and corporate businesses in the ratio of 2:1. Our advantage is that we will kick off with zero net non-performing assets and a 30 per cent capital adequacy ratio. We are looking at the broader picture of financial services and solutions.
Banking is the platform for offering these services and solutions. We already have insurance, mutual funds, investment banking etc in our fold. But the important thing to note is that such is the structure of company that there is no conflict of interest.
Since you need to bring down your stake to 49 per cent, do you plan on bringing in a foreign partner?
Right now there are no plans for roping in an equity partner. But we have an open mind and are looking at opportunities. We have a reasonable time frame to bring down the promoter's stake to 49 per cent- any time
after one year.
How about a great start with buying an existing bank?
There are both advantages and disadvantages. By taking over a bank, we can add to the distribution network but we need to be careful about the baggage. There is a great attraction for a ready-made bank. It makes sense to look at it. I have an open mind but right now we are not working on any deal.
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