India needs to improve its judicial processes with respect to bankruptcy and insolvency in order to ensure that lenders can recover their dues and continue to lend with confidence, Kotak Mahindra BankMD and CEO Uday Kotak said.

“I think we really need to fix the judicial system that is consistent with a bankruptcy law because at the end of the day, if banks lend money, we must be able to recover the money. If we have a problem there, it constrains our ability to take better risk,” Kotak said at the launch of Amitabh Kant’s book ‘Made in India’ on Friday.

There is a need for the judiciary to be in sync with bankruptcy law requirements, and the courts must ensure that banks are able to recover money, Kotak said, adding that while Insolvency and Bankruptcy Code (IBC) is a great concept to ensure that the creditor stays in control, a lot more work still needs to be done.

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Kotak also called for a better understanding of risks by Indian banks, saying that in order to grow the financial sector, banks needs to understand and manage risks, such as acquisition, project, or infrastructure financing.

“India has the brain power and the risk management to be able to manage a financial sector, which meets the aspirations of all of India’s growth as we go forward,” he said, adding this is required for Indian banks to fund large corporate actions, such as acquisitions.

Kotak added that he hopes to see an Indian financial entity among the top three financiers in the world over the next 5-10 years.

Earlier in March, Kotak had said that the resolution process of Reliance Capital and Srei companies signal poor recovery below liquidation value for creditors.

“NCLT process is also tardy whether IBC or otherwise. In IL&FS too, while the recovery ratio is better, the legal process takes long. Time for policy relook at financial sector resolution,” he had then said.

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