Uday Kotak, executive vice chairman and managing director, Kotak Mahindra Bank, has said that over the next five years, private sector banks’ marketshare will go up significantly to be on par with that of the public sector banks. Speaking with Anurag Shah, Kotak revealed the factors that give him the confidence about the prospects of a bright future for private banks in India.
Three issues are there that give me the confidence to talk like that and they are 1) industry structure between private and public sector banks, 2) financial savings of people and 3) digitisation of the process involved. In terms of financial savings, people have shifted their habits investing in gold and real estate to financial assets. In addition, technology has brought financial liberalisation to small depositors, credit card holders and those who seek small or personal loans. In addition, if we talk about incremental growth than entire growth in loans is happening in the private sector banks. Their share is growing pretty significantly and is almost equal to the levels of growth witnessed in public sector banks.
Yes Kona Kona growth ki opportunity hai (There is a chance of growth on every corner). If chosen in a right way then opportunities are there to lend in different pockets like retail loans, commercial loans and corporate loans along with small business loans. At present, the micro-India economy has grown at a good pace in past three years, which provides a combined opportunity to grow.
I feel credit growth of 11-12% will help the private sector banks to increase their share in the market. If I talk about Kotak and other banks similar to ours than it can register a growth that can be two times of the nominal growth of the country. Nominal growth means real GDP + inflation.
I feel every bank, may it be a public bank or a private bank, will have to improve its risk management system, and any failure can create adverse situations for any bank. Improvement in risk management is only a key to growth for both banks.
I feel, no privatisation will happen till 2019 general elections. Consolidation between the public sector banks is a good idea.