4 Things Uday Kotak Did That Paved the Path to Success For Kotak Mahindra Bank Kotak has resigned as the CEO and MD of Kotak Mahindra Bank. Dipak Gupta, the joint managing director, will carry out the duties of the MD and CEO until December 31st
By S Shanthi •
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Uday Kotak has resigned as the CEO and MD of Kotak Mahindra Bank. However, he will continue as a non-executive director of the bank. This was announced in a communication to exchanges on September 2nd. In the interim, Dipak Gupta, the joint managing director, will carry out the duties of the MD and CEO until December 31. The bank said that this is subject to the approval of the RBI and the members of the bank.
"Succession at Kotak Mahindra Bank has been foremost on my mind, since our Chairman, myself and Joint MD are all required to step down by year-end. I am keen to ensure smooth transition by sequencing these departures. I initiate this process now and step down voluntarily as CEO. The bank awaits RBI approval of the proposed successor. In the interim my dear colleague Dipak Gupta - currently Joint MD, will function as MD & CEO, subject to approvals," Kotak tweeted.
Uday Kotak started Kotak Mahindra 38 years ago, with 3 employees in a 300 sqft office in Fort, Mumbai. "I have deeply cherished every bit of this memorable journey, living my dream. We are now a pre-eminent bank & financial institution, created on the basic tenets of trust and transparency," he added.
The Hurun Global Rich List 2022 which ranked a total of 3,381 billionaires from 69 countries, listed Uday Kotak at the 120th spot. It also said that he is the world's third-richest banker.
From an aspiring cricketer to one of the world's richest bankers, the billionaire banker's journey has been incredible. Here are the four most remarkable things he did at Kotak Mahindra Bank that paved the way to success.
Putting eggs in many baskets
In the 1980s, Uday Kotak started Kotak Mahindra Finance as an invoice discounting business. In 1995, the company entered the distribution and brokerage business. From there on, it diversified into many financial sectors including investment banking, bill discounting, stockbroking, life insurance, car finance, and mutual funds. Kotak was the reason behind this diversification. In 2003, Kotak Mahindra Finance received a banking license from the Reserve Bank of India (RBI) and it became the only non-banking finance company to receive a banking license from the RBI.
Making innovation the lifeline
The bank is well known for many of its new-age initiatives. It has been constantly upgrading its offers to match up to the changing consumer demand. For instance, in 2017, it launched 811, which offers a zero-maintenance digital bank account, along with a virtual card. It said that consumers could also earn a 6 per cent interest per annum on their savings. Another example would be the launch of its ActivMoney feature which gives customers the benefit of FD-like interest rates of up to 7% per annum with no charges on premature withdrawal. Excess funds in the account are automatically transferred to an FD. This gives customers the chance to earn a higher interest on their savings.
Betting on Mergers and Acquisitions
Many M&As have been turning points for the bank. For instance, according to news reports, shares of Kotak Mahindra Bank rose high after he closed a $2.4 billion deal in November 2014 in rivalry with ING Vysya Bank. He acquired ING Vysya Bank, which is partially owned by Dutch financial services group ING, for $2.1 billion in 2015. In 2015, he partnered with Bharti Airtel to start a small payments bank.
He also ended its partnership with Goldman Sachs by acquiring 25% stake in two subsidiaries in 2019. Quoting a recent example, the bank bought microfinance company Sonata Finance in an INR 531 crore all-cash deal. Once regulatory approval comes in, the bank can leverage Sonata Finance's network to offer a wider suite of products.
Making Kotak Mahindra Bank a household name
"A long time ago, I saw names like JP Morgan and Goldman Sachs dominate the financial world and dreamed of creating such an institution in India. It is with this dream that I started Kotak Mahindra 38 years ago," tweeted Kotak. Today, Kotak Mahindra Bank is India's third-largest private sector bank by market capitalization, after HDFC Bank and ICICI Bank. The bank has 1600 branches and 2519 ATMs, as of 2021. The bank has assets worth $62 billion as of 2021.
The bank has generated many employment opportunities as well. "We have created value for our stakeholders and provide over 1 lakh direct jobs. An investment of INR 10,000 with us in 1985 would be worth around ₹ 300 cr today. I am confident that this Indian-owned institution will continue to play an even more important role in India's transformation into a social and economic powerhouse," he said.
