Billionaire banker Uday Kotak on Wednesday batted for allowing Indian savings into long-term risk capital to dilute the dominance of international savers into this segment. Kotak who was speaking at an event organised by the Confederation of Indian Industry (CII) also said that policy makers would have to focus on creation of a domestic venture capital and private equity industry.
“In the capital markets you are seeing a disproportionate dominance of international savers, India needs to develop a strong equity and risk culture combined with cutting edge governance,” Uday Kotak, Chairman CII and chief of Kotak Mahindra Bank said. “We need to develop the long term venture capital and private equity industry in India. Indian savings are not getting channelised into these segments, savings into long term risk capital is an area we need to work on. We require a change in mindset at the level of both the policy makers and savers.”
Kotak added that despite the savings rate in Indian being very high, Indian savers chose traditional less risky instruments rather than opt for equity investments.
“If you look at India’s saving rate, it’s been declining in the recent times but it remains pretty high,” he said. “What is happening is bulk of the Indian savings traditionally in India have been risk averse. The amount of money gone into equity risk has been relatively lower.”
To plug the gap in infrastructure financing the recently announced Union Budget sought to revive the development financial institution (DFI) model to act as a provider for infrastructure financing. Similar institutions like the Industrial Credit and Investment Corporation which later became ICICI Bank and the Industrial Finance Corporation of India (IFCI) have in the past tried to cater to similar segments.
More recent avatars have been IDBI and IDFC but have failed to achieve success in this direction, leaving banks as the sole provider of infrastructure financing. Most believe that the absence of long term funds from savers plays a big role in the failure of such institutions.
Separately, Kotak also said that the recent budget push on infrastructure investments would go a long way in cementing India’s position as a global leader.
“Any country which aspires to be a global leader needs a strong domestic economy, add it is here that the government’s push on infrastructure and investment and not depending only on the consumption engine is what we need to really focus on,” he said. “Atmanirbhar Bharat also means a globally competitive India and we cannot get to economic leadership unless we get a significant positioning in the world of exports.”
“In the capital markets you are seeing a disproportionate dominance of international savers, India needs to develop a strong equity and risk culture combined with cutting edge governance,” Uday Kotak, Chairman CII and chief of Kotak Mahindra Bank said. “We need to develop the long term venture capital and private equity industry in India. Indian savings are not getting channelised into these segments, savings into long term risk capital is an area we need to work on. We require a change in mindset at the level of both the policy makers and savers.”
Kotak added that despite the savings rate in Indian being very high, Indian savers chose traditional less risky instruments rather than opt for equity investments.
“If you look at India’s saving rate, it’s been declining in the recent times but it remains pretty high,” he said. “What is happening is bulk of the Indian savings traditionally in India have been risk averse. The amount of money gone into equity risk has been relatively lower.”
To plug the gap in infrastructure financing the recently announced Union Budget sought to revive the development financial institution (DFI) model to act as a provider for infrastructure financing. Similar institutions like the Industrial Credit and Investment Corporation which later became ICICI Bank and the Industrial Finance Corporation of India (IFCI) have in the past tried to cater to similar segments.
More recent avatars have been IDBI and IDFC but have failed to achieve success in this direction, leaving banks as the sole provider of infrastructure financing. Most believe that the absence of long term funds from savers plays a big role in the failure of such institutions.
Separately, Kotak also said that the recent budget push on infrastructure investments would go a long way in cementing India’s position as a global leader.
“Any country which aspires to be a global leader needs a strong domestic economy, add it is here that the government’s push on infrastructure and investment and not depending only on the consumption engine is what we need to really focus on,” he said. “Atmanirbhar Bharat also means a globally competitive India and we cannot get to economic leadership unless we get a significant positioning in the world of exports.”
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15 Comments on this Story
 | शैलेश शर्मा4 days ago This man want to sell hard earned money. He is pro privatisation. He is averse to regular savings. He is just going to be next mallya or kapoor. Why he don't want investment through proper debt route instead want to risk someone else's money that too when our private companies are least transparent. |
| Deepak Umredkar4 days ago Oh really, do you take risks on loans to Lands |
| Geetha Mahadev4 days ago Why does not Uday recommend all Bank deposits of individual account holders be 100% insured? Or The Bankers give an encashable bank guarantee to the holders of the accounts? |