An Indian who saw an opportunity for arbitrage from his country’s inefficient state-run banking sector but never forgot the community spirit of his extended family upbringing has been recognised with this year’s EY World Entrepreneur of the Year award.
Uday Kotak claimed his prize was for the two-thirds of the 1.2bn people in India who remain unbanked and who his company, Kotak Mahindra Bank, has aimed to reach during three decades of trading, offering a variety of financial services.
“I am a believer that your roots and community are extremely important,” he said after accepting his award at a ceremony on the waterfront in Monaco. “It is possible to reach out and form relationships with the best in the world.”
Mr Kotak grew up in a family involved in cotton farming in a household shared by 60 family members.
“All the cousins went to the same school. There wasn’t a choice and that affected the whole family culture.
“It was capitalism at work but socialism at home.”
After graduating from business school in the early 1980s, Mr Kotak was spurred into action by a sense of injustice at the wide interest rate spreads he saw being made at the time by some of India’s banks.
“I was shocked to find that triple A-rated borrowers would get money at 17 per cent when families I knew would only get 6 per cent interest on their money,” he says.
Although Kotak Capital Management Finance was one of many non-bank finance companies set up in India at the time, it is one of the few that has survived, growing into an international group with $2.8bn revenues.
Although Mr Kotak remains passionate about focusing on the vast opportunity that remains in his country, and speaks with pride of his all-Indian education and upbringing, his bank prospered in the early years by forming partnerships with non-Indian financial services companies to leverage their brands and expertise.
For instance, a car finance joint venture was formed with Ford Credit while an insurance joint venture was agreed with Old Mutual, which still stands to this day.
Over the past decade, KMB has flourished, growing its assets 25 times and its income 30 times.
Despite the rapid growth of investment banking, Mr Kotak was not tempted to narrow the bank’s focus.
The business now has operations in the US, the UK, United Arab Emirates, Singapore and Mauritius. However, his interest lies in capitalising on the considerable opportunities that still remain in his home market.
“I love work and I love growth,” he says. “What drives me is the desire to grow an institution built in India that Indians can be proud of and the world will sit up and watch.”
Acting with integrity is important, Mr Kotak says. A key part of his business has been to provide affordable finance to rural Indian communities, which traditionally struggle to gain access to finance.
The company has had its difficult moments, Mr Kotak admits, during the three financial crises that have hit India since 1992.
“Every time the lesson was simply hang in there, do the right thing and keep to your principles of prudence and humility and you will come back,” he says.
“I have a long way to go,” he adds. “We are a tiny company by global standards but what we are committed to is to build a very strong business in India’s diversified banking market.”