Regulators should respond fast to financial sector accidents: Uday Kotak

Veteran banker Uday Kotak on Wednesday said regulators should not be too conservative and cautious but should respond fast to "accidents" in the financial sector.
 

"Zero accident policy is also dangerous. If you are wanting to grow fast, there will be need for good regulations. We may have some accidents but it is also how fast we respond and correct the accident," the Founder Director of Kotak Mahindra Bank said at an event organised by AIMA (All India Management Association) in the national capital.
 

He said the scars of the past should not make regulators too conservative or cautious but there should be a better regulatory environment.
 

On the Paytm Payments Bank Ltd (PPBL) matter, Kotak said he would not like to comment on individual company but said "RBI knows more than You and I." Paytm Payments Bank Ltd, an entity promoted by One97 Communications Ltd, faced regulatory actions by RBI for failure to comply with host of regulatory norms, including Know Your Customer (KYC) guidelines.
 

Last week, RBI advised customers as well as merchants of PPBL to shift their accounts to other banks by March 15, giving 15 more days to the beleaguered entity to close most of its operations, including deposit and credit transactions.
 

Kotak said RBI has done a phenomenal job as a regulator in the last few years, and ensured financial stability along with good macro economic management despite the coronavirus pandemic.
 

In a bid to become a USD 30 trillion economy by 2047, Kotak said the growth rate should be 7.5-8 per cent.
 

About the Insolvency and Bankruptcy Code (IBC), he said it is a good law but the resolution takes too long.
 

"How do you have an Insolvency and Bankruptcy Code which takes years for resolution? So, very good concept, good law but devil is in the details and devil is in the execution. Therefore, the speed of resolution is a problem," he said.
 

He also said that India has transformed from being a nation of savers to investors with more and more people parking their surplus fund in mutual funds and equity market.

Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd