The Hindu Business Line : Kotak Bank plans overseas expansion

The bank plans to handhold overseas investors and help them tap into the India story. Currently, it is managing a portfolio of about $1.3 billion through its UK subsidiary, which is about five per cent of the bank's overall portfolio; it expects to increase this to about 25 per cent within next three-four years.

The bank may raise about Rs 300 crore as Tier II Capital.

The Vice-Chairman and Managing Director of Kotak Mahindra Bank, Mr Uday S. Kotak, said India is at an inflection point of major growth phase and the potential has been barely tapped. Like the US market which first built its domestic presence and then expanded, India is at a similar platform that can only get better.

Rural market

"There may be minor issues of occasional turbulence and short term volatility from market point of view, but if you take a macro picture, the growth story is extremely bullish. A return of 15 per cent over the next five years and beyond is certain for a long-term investor. The financial services market is present only in the metros and confined to some select towns and cities. The rural market is out there to be tapped," he said.

However, striking a note of caution with regard to overheated real estate market, Mr. Kotak warned of possible correction. The bigger the bubble, the impact would be bigger. Land values have become too exorbitant and there is excessive exuberance.

Nikkei bubble

The Japanese market as reflected by Nikkei hit a level of 40,000 about two decades ago. But the same market is now at 16,000. This only reflects how an overheated market could dramatically change. He warned investors to be cautious and not get carried away by fast buck makers.

With a market capitalisation of about $2.7 billion, Kotak is now the fourth largest private sector bank and continues to expand operations both in the domestic market and overseas.

From 84 branches now, it plans to increase this to 110 by March 2007. As the bank taps into the overseas markets, the accent would be on helping global investors to invest in India product, he said.

Referring to inorganic options, Mr Kotak said as the market opens up further, it won't be long before you see Indian banks buying into foreign banks.

On ISB board

The Dean of Indian School of Business, Dr M. Rammohan Rao, welcoming Mr Uday Kotak on the ISB Board, on Wednesday announced that they would set up a trading lab that would provide live interface for students with markets.

"Since the ISB is market-driven, we believe that there is immense scope for analytical finance, capital markets, regulatory frameworks, and micro finance," he said.

Mr Kotak said that the bank would seek to deepen its association with the ISB through executive and customised training programmes to groom finance professionals.

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