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Dipak Gupta, Joint Managing Director, Kotak Mahindra Bank, is not worried about the competition that will come his way once the Reserve Bank of India issues new banking licences. Gupta’s confidence stems from the fact that it will take at least two years for the new banks to find their feet. By then, his bank would have further expanded.
“I think the competition is still two years away and the fight will be stiffer. There will be a lot more applications for bank licences, and it will be a difficult choice how and who the RBI will choose.
“Banking was not as big a business when we started as much it is now,” Gupta said in an interaction with Business Line . The new bank licensees will take about one year to get statutory approvals and another to set up the bank.
New banks will have to look at products that differentiate them from the older ones with an appropriate pricing.
“Banking is all about trust, as you have people’s money and trust builds up over a period of time. Hence, there is no shake-up (migration of customers) seen anytime soon,” Gupta said.
Customer’s heart
According to Gupta, on the deposits side, a customer’s heart comes into play. “You will give me your money only if you trust me, the equation between our hearts needs to match. Hence it is on the liability side, it is important to build up the trust,” he said.
On the lending side, banks have to work through the mind of the customer as it does not matter to the customer who gives the money. It boils down to which bank gives better service and pricing. Accordingly, the customer will choose what works best for him, explained Gupta. Mid-sized lenders such as Kotak Mahindra Bank will have to sharpen all its functions including distribution, positioning and products to gear up for the competition.
“We need to have more branches and a wider range of products,” he said. The private sector lender plans to expand its branch network to 500 by next year-end. “By next year-end we will reach a branch network of about 500. We are growing by about 100 to 125 branches every year,” Gupta said.
At present, Kotak Mahindra Bank has a network of about 396 branches and over 907 ATMs across the country. As at September-end, the bank had deposits of Rs 45,463 crore and loans of Rs 45,443 crore.
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