One of the country's top bankers Uday Kotak has called for increased participation of domestic savers in India's corporate growth, so as to keep the gains at home itself, rather than benefiting only the foreign equity investors.
One of the country’s top bankers Uday Kotak has called for increased participation of domestic savers in India’s corporate growth, so as to keep the gains at home itself, rather than benefiting only the foreign equity investors. Taking the example of HDFC’s growth in market capitalization, Uday Kotak explained how the good gains have actually ended up in the hands of foreign investors, which could have otherwise accrued to domestic savers’ kitty. Uday Kotak commended the growth of HDFC, which has grown by leaps and bounds over the last two decades to become India’s sixth most valued company by market capitalization.
“In 1982 when I started my career, HDFC Ltd’s total market capitalization was Rs 500 crore and foreign ownership was zero. Today that Rs 500 crore has become Rs 275,000 crore. More than 80 per cent is foreign owned. Here’s a company whose core business is money from retail savers – Indian house owners. And of the entire gain made by that company, 80 per cent belongs to foreign investors,” Uday Kotak told in an interview to The Indian Express.
Explaining reasons for the same, Executive Vice Chairman and MD of Kotak Mahindra Bank, Uday Kotak observed, “Why has it happened? Our policy makers, in their desire to be conservative on debt borrowings, opened up the equity. I’m not against opening up of equity. We should have opened up the strengthening of Indian financial savings 30 or 40 years ago. I think as a nation, and us as Indians, we should ask a question how are we going to address this?”
Uday Kotak pointed out that companies in America and China have benefited the resident savers of those countries. “The biggest growth companies in the US are Amazon, Facebook, Google, Microsoft and Apple. Go and check out. The majority of these companies are American owned. American savers benefited by them. In China, Alibaba, Tencents and Baidu. What’s the majority holding?” Uday Kotak points out.
The ace banker used to opportunity to bring home the point that Kotak Mahindra Bank has majority Indian ownership. “Out of five Indian private banks have majority foreign ownership. Only one with Indian majority is us (Kotak Mahindra Bank),” Uday Kotak said.
Uday Kotak also called for policy reforms to benefit the Indian savers. “We must have mindset that for the right governed companies, we will want Indian champions on the basis of what they do in the marketplace and not based on favours from the government. The policy framework should encourage outstanding Indian companies over the next 10 or 20 years. And let broadbased Indian savers over time gain out of that,” said Uday Kotak.
(First published on 15-01-2018 at www.financialexpress.com)