'Our Goal Is Creating New Avenues Of Growth': Uday Kotak

Kotak Mahindra Bank surprised the banking sector in November by announcing its plans to take over ING Vysya Bank in an all-share deal, valuing its peer at $2.4 billion. The deal put the spotlight back on consolidation in the banking sector, whetting other investors' interest in the sector. Recently, Kotak Mahindra Bank announced the listing of new equity shares of the merged entity on local stock exchanges. Uday Kotak, executive vice chairman and managing director, Kotak Mahindra Bank, told INNLIVE that he would be fair to all employees. Excerpts from the interview:

Will the Kotak group continue with the inorganic growth strategy?
We have taken a lot of strategic steps in the last six months. We are quite excited about that. Here on, we are going to be focusing more on integration execution. There are no immediate plans of additional inorganic growth. We will build the organisation steadily, integrate well and create value.

How long will the merger take to complete?
The merger is completed legally. Erstwhile shareholders of ING Vysya have got shares of Kotak Mahindra Bank and they are now listed. Our approach is to merge larger common areas. So treasury, taxation and secretariats of the two banks have been merged. Wholesale bank and wholesale credit will be merged next and then consumer bank, people and technology will be merged. The entire exercise will be complete by March 31, 2016.

How many employees of ING Vysya will join the merged entity? Are you absorbing the entire workforce?
We have about 18,000 and we will get a little over 10,000 employees from the ING Vysya system. Our focus is to create new opportunities of growth. Expose people to new challenges and we have opportunities in banking, insurance, mutual funds, and across the range of financial services. I am a believer that the best way to create jobs is growth. We will be fair to all the employees. We will work towards 'best person for the best job'. We have an internal placement cell working towards that.

You also plan to hike foreign shareholding in the bank. Have you applied to the Foreign Investment Promotion Board (FIPB)?
Post merger, the foreign shareholding in the bank is about 48%. We have applied to FIPB to go up to 55%. For private sector banks, what is allowed as per policy is up to 74%. Once FIPB allows us to hike the foreign shareholding, the board will decide if we want to hike it further. Among the private sector banks, we have the lowest foreign shareholding. There is a lot of interest from foreign investors. ING will have 6.5% stake with a lock-in period of one year.

Is the promoter shareholding in Kotak Mahindra Bank expected to come down?
The promoter shareholding about a year back was 43%. It has come down to 34% post this merger. We have to come down to 30% by December 2016.

After acquiring ING Vysya, Kotak Mahindra will have access to a huge SME portfolio. You were planning to shed the wholesale focus and concentrate on retail. Where will the future growth of the bank come from?
India is a country of small and medium enterprises and we see tremendous potential in that space and we see ourselves growing big in the SME sector. We are still focused on the wholesale lending, but we are very focused on the quality of our customers. We want to ensure that we get the right corporates so that the risk-adjusted returns are good.

In the payments bank business, your bank is tying up with Bharti group...
The country is large and has more mobile phones than truly operating bank accounts. So if mobiles can help us to reach out to customers in a cost-effective way, we can serve customers across the country it will be a big transformation for India. To explore that space, we have decided to take up to 20% stake in Bharti's venture in payments.