Physical banking will get slower in terms of share, says Uday Kotak

Speaking at the Business Standard's annual conclave BS Manthan, Uday Kotak, founder and director of Kotak Mahindra Bank said politics is emerging as a highly disruptive force, reshaping global finance

In the digital age, physical banking will very soon take a back seat, said Uday Kotak, founder and director of Kotak Mahindra Bank at the Business Standard’s annual BS Manthan conclave on February 27 in New Delhi. Although physical banking comes with a trust and brand element, it will come down, he said.

 

Kotak also believes that politics is emerging as a disruptive force and it is reshaping global finance in unpredictable ways. He sees this shift as a defining feature of the modern economic landscape. In a conversation with Business Standard’s AK Bhattacharya at the BS Manthan event in New Delhi, Kotak spoke about the impact of politics in economics, from trade tariffs to monetary policies.

 

 

“If you look at global finance today, every morning brings a fresh piece of information that can change our entire worldview,” Kotak said. “Especially in the Trump era, we are witnessing politics play a much bigger role in financial decisions. We are moving to a world where power is power.”

 

Kotak furthered his point talking about markets responding primarily to interest rate changes or corporate earnings. “If you look at India’s economy, something as straightforward as tariff increases in the auto sector can instantly impact market sentiment. That’s a direct example of politics shaping economics,” he explained. “Earlier, change was evolutionary. Now, it is revolutionary."

 

Uday Kotak on market reaction to political shifts

 

Speaking on the equity market, Kotak said that the markets, long viewed as a reflection of economic fundamentals, are increasingly reactive to political signals. The strengthening of the US dollar post-Trump’s victory is a case in point. “The world is seeing a surge in dollarisation. But India remains in a strong position in the face of this trend. We are still a positive recipient of international capital flows, especially from Foreign Portfolio Investors (FPIs),” Kotak said.

 

However, he also cautioned against complacency. “Some market segments are highly valued. The key is to find an equilibrium. Investors must decide — are they prepared to exit the market when needed, or do they see themselves as long-term savers? That’s the manthan.”

 

Uday Kotak on India’s economic challenges

 

Despite India’s growth story, Kotak pointed out two major challenges ahead. The first is the current account deficit (CAD), which represents a country’s negative profit-and-loss statement. “At about $50 billion, India’s CAD is currently modest and largely influenced by oil prices. But if you break it down, our trade surplus with the US is around $40 billion, while we have a substantial trade deficit with China. That imbalance needs addressing.”

 

Kotak also emphasised on improving India’s Return on Time Invested (ROTI). “We must focus on increasing productivity and efficiency in our economy. Every rupee and every hour spent must generate better returns.”

 

Need new lens for the banking sector?

 

Having witnessed multiple financial crises — from the Asian crisis of the 1990s to the global financial meltdown of 2008 and the Covid shock — Kotak perceives banking as the backbone of economic resilience. “India has come a long way, but we must keep evolving. The role of banking in finance must be viewed holistically. Customers today are both savers and investors, and banking must adapt to this shift,” he said.

 

Strengthening balance sheets to withstand shocks is critical, as is regulatory evolution, he added. Kotak acknowledged the progress made but suggested a more integrated approach. “I agree with the Finance Minister — financial regulation across different policymaking bodies must be looked at holistically. Regulators have done a commendable job in steering India’s financial sector, but the framework must continuously evolve.”

 

India Inc’s share in investment needs to go up

 

Despite a promising macroeconomic picture, India Inc’s reluctance to invest remains a concern. Kotak said that if the corporate sector follows what PM Modi has said, private investment will come up. “If business and policy follow each other, we will get there,” he said, referencing Prime Minister Narendra Modi’s push for ease of doing business and ‘minimum government, maximum governance’.

 

Kotak on cricket, finance, and life

 

Even in a discussion dominated by economic and financial intricacies, Kotak found a way to bring in an unexpected metaphor — cricket. Reminiscing about his school days, he spoke of his coach, Ramakant Achrekar, who later trained Sachin Tendulkar. “He wasn’t just about batting and bowling. He emphasised fielding, discipline, and passion. These lessons apply to everything in life, including finance,” Kotak said.

 

Drawing parallels between cricket and banking, he observed, “Like different game formats, finance requires different strategies. But some fundamental principles — discipline, adaptability, and long-term vision — remain constant.”

 

“The real challenge,” he said, “is to get back our animal spirits — the drive to build, invest, and grow fearlessly. That’s what will define India’s future in the global economy.”

 

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