NE Watch Desk
Bharat will celebrate 100 years of its
independence in 2047 and the nation is targeting to achieve a $30 trillion GDP
by that time. While, reputed and experienced Indian banker Uday Kotak noted
that Bharat is metamorphosing from a nation of savers to investors, he shared few
points to sustain its growth story.
Few Points Shared By Uday Kotak
- Deliver quality paper as well as evade
bubbles through regulation, policy and education. Raising equity at a lower
cost of capital for productive use is important for companies. - Bharat must stay away from tax arbitrage
in liability. It will be a one-legged fray unless debt markets expand. - Revaluation is required for double
taxation on dividends. - Financial markets may suffer twist caused
by low-cost leverage through derivatives and thus attention needed here. - The banking sector faces challenges with
its deposits and cost of funds in view of savers turning into investors. - Big corporate sector needs move to
capital markets and to be away from banks. Rather than becoming storage houses,
banks need to become distributors of corporate debt and penetrate mid-sized
corporates, MSMEs and consumers. - Shun away regulatory regime and a retrospective
tax. - To take forward Bharat’s aim, acquisition
of financing and streamlining of the IBC or NCLT process need urgent attention.
Uday Kotak talked about the early 80s, when
the Indian saver had gloomy outlook in financial assets versus land and gold. However,
the saver shifted some parts to bank deposits, UTI and LIC steadily.
Pointing out that investing in equities
was calculated as “speculative” in the 90s, the ace banker said companies hence
went to the foreign institutional investor or FII, seeking capital.
Uday Kotak felt Bharat’s capital market
was being exported as companies expanded capital through not-so-popular Luxembourg
Stock Exchange.
The banker, however noted, scenario started
improving in the early 2000s as many savers were converting into investors.
In this transformation process, mutual
fund platforms, cash equities and derivatives markets, insurance funds, global
private equity, other platforms like AIFs, the lower tax regime for equity contributed
a lot.
Reacting to Uday Kotak’s tips, Finance
Minister Nirmala Sitharaman thanked him and appreciated his invaluable and
well-recognised “experience in the financial sector”.
Former Railways Minister Suresh Prabhu termed
these suggestions as “insightful and thoughtful” and Kotak as “an implementer
par excellence” not simply a man of ideas.
Meanwhile, RBI has given go ahead for appointment
of CS Rajan as the Kotak Mahindra Bank chairperson after Uday Kotak resigned as
managing director and chief executive officer this year.
