Kotak Mahindra Bank reported a 20% rise in standalone net profit for the third quarter of FY18. Dipak Gupta, joint managing director, and Jaimin Bhatt, president and group CFO, said in a post results press conference that the bank’s growth has come in from across segments. Gupta also observed that 100% FDI in banking sector may not be appropriate. Edited excerpts:
What is your take on 100% FDI in banking?
I think you have to make up your mind whether banking is intrinsic to the economy or not. Do you want all earnings from something which is intrinsic to the economy, exported? You would rather have Indian savers get the benefits of any growth in a structural economy sector. Banking, whether you like it or not, is sort of a bellwether for how directionally the Indian economy moves. Hence, it is not appropriate for it to be 100%. It’s like defence. Would you allow 100% in defence? Yes, may be some select ones you should. But, generically would you want it or not? Banking is similar. It’s part of core economy.
Have there been any divergences?
As we said last time, the inspection for March 2017 is completed and there is no divergence for us to report.
Last quarter you said the agri segment could see some slippages. How does it look now?
It’s far more comfortable now. I believe we have done a decent job on the recoveries front. It is significantly lower than what was there in that quarter.
You saw a growth in the corporate book. Where is the demand coming from?
We are seeing an improvement in growth but not necessarily margins. On the corporate side, a lot of that is market share grab. The growth is all over. It still is sort of refinancing—as interest rates came down, corporates always find it easier to refinance their lending.
Are you be looking to increase your share of corporate lending?
Historically we have just followed a balanced approach. If you look at our portfolio, we are reasonably spread between wholesale, which is corporate and SME, and retail. I think that makes sense. It is important for you to keep the discipline. From a philosophy point of view, I think we basically cover equally all three segments. On slippages…We have also taken some recognition of things which are not necessarily the 90-day road. If I look at my total slippages this quarter, including those, it would be less than Rs 300 crore, which would therefore mean less than two basis points of the overall advances.
What is your exposure to the second list of defaulters issued by the RBI?
In the second list, we would have exposure to six accounts. These are not large exposures. We have ended up providing almost two-thirds of what we have exposures on. The exposures would be around Rs 300-400 crore.