Kotak Mahindra Bank has created value for stakeholders and now provides 10,000 direct jobs and many more in indirect jobs, managing director and chief executive officer Uday Kotak said in a letter to shareholders.
“An investor who invested Rs 10,000 with the bank in 1985 would be worth Rs 300 crore today,” he said. As per data available with Bloomberg, in the past 28 years (since 1995), the bank’s stock has risen at a compound annual growth rate of 28%.
He also said Kotak Bank was the quintessential product of the India growth story and the financial sector evolution and has built an institution on the basic tenets of trust and transparency.
At the same time, he cautioned against the bureaucratisation of financial services in India.
“I feel the financial sector players risk becoming more robotic, curbing the entrepreneurial flair since the fear of making a mistake overrides the joy of creation and development,” he said.
“While we need ‘Arjuna’s eye’ on risk management, we must prevent bureaucratisation of financial services,” he added.
The founder-promoter of the bank, who is expected to step down by December this year, said it is unusual in today’s world of banking to have an individual with around 26% skin in the game with disproportionate family assets in one stock, emotionally attached to living his dream of making India proud.
Kotak said he has spent most of his life here, starting from scratch with very little capital in 1985, with three people and a 300-square-feet office.
Expressing his bullishness on the Indian economy, he said at this stage, a virtuous cycle for India is on the cards, and the financial sector is in its Goldilocks period. The clock striking midnight seems far away for Cinderella. “We must avoid a mindset that if we want accident-free roads we will restrict cars. Instead, to take this analogy further, we need more roads, more cars, and better signals and traffic regulations. Accidents have to be minimised and managed and cannot be eliminated without having a significant impact on growth aspirations,” he said.
On hiring, he said the bank is willing to benchmark the internal talent vis-a-vis its needs and attract talent from outside as well to be the best in class in what it must do for stakeholders.
He added that in the past one year itself, the bank has onboarded a new CTO, a chief of customer experience, a head of brand, product, and marketing, and a chief of retail and commercial risk to drive potentially transformative changes in each of these areas. “At the same time, we will grow internal talent, which is future-ready,” he added.
Going ahead, Kotak is confident that the alignment and commitment of shareholders, bank, and management will help the bank navigate through a changing environment.
“I would like to pursue the Indian dream of a $30-trillion economy and unshackle the financial sector in a nuanced manner towards optimum regulation,” he said.
As of March 31, the total assets under management for the Kotak Group were more than Rs 4.2 trillion. The alternate assets book grew 125% year-on-year to Rs 46,077 crore as of March 31.
Bankers’ cheques
* Uday Kotak opted to forego his fixed salary and accepted a token salary of Re 1 for 2022-23
* Dipak Gupta, joint MD, was paid Rs 5.43 crore. His total package included a basic salary of Rs 2.74 crore and annual incentive of Rs 1.18 crore
* Whole-time directors KVS Manian, Gaurang Shah and Shanti Ekambaram got total packages of Rs 5.3 crore, Rs 5.03 crore, and Rs 2.02 crore, respectively. This excludes gratuity, value of car perquisites and perquisites value on ESOPs