Uday Kotak, vice-chairman and managing director of Kotak Mahindra Bank, poses for a photograph at his office in Mumbai. (Photograph: Dhiraj Singh/Bloomberg)

Uday Kotak Says Indian Banking In Stasis, Needs Fewer State-Run Lenders

The Indian banking system is in ‘stasis’ and the country needs an efficient financial system which does not get impacted frequently, said Uday Kotak today.

In the remarks that came amid the discovery of the nearly Rs 13,000-crore fraud at Punjab National Bank, one of the biggest in the Indian banking history, Kotak said there is a case for trimming the number of state-run lenders.

“We can’t be bogged down every few years, from time-to-time, where the system gets into a stasis like it is today,” the executive vice chairman and managing director of Kotak Mahindra Bank said at the India Today Conclave.

There was no explicit mention of the scam at PNB allegedly involving gems and jewellery players Nirav Modi and Mehul Choksi by Kotak, who maintained that he does not wish to get into any ‘political debate.’

We frankly need fewer public sector banks which may happen through mergers and shrinkage.
Uday Kotak, Managing Director, Kotak Mahindra Bank

At present, there are 20 entities, including the largest lender State Bank of India, which are run by the government and account for nearly 70 percent of the assets in the system. Almost all of them are affected by high levels of non-performing assets.

Kotak has grown his bank to be the fourth largest in the private sector space by merging with ING Vysya Bank. The lender recently raised Rs 5,500 crore in core capital for various purposes, including possibilities of inorganic growth.