Banking system in a stasis, can't be bogged down every few years, says Uday Kotak at India Today Conclave

Speaking at the India Today Conclave, Uday Kotak, Executive Vice Chairman and Managing Director of Kotak Mahindra Bank said the Indian banking system is in "stasis" and there is a need of efficient financial system which does not get impacted frequently.

Kotak's remarks come at a time when public sector lenders are entangled in a series of bank frauds and loand defaults. State-run Punjab National Bank (PNB) is caught in one of the biggest scams in the Indian banking history.

Kotak said there is a case for trimming the number of state-run lenders. "We can't be bogged down every few years, from time-to-time, where the system gets into a stasis like it is today," Kotak added.

Uday Kotak was part of a panel discussion on 'Democracy, Demography, Demand: Mystery of the Missing Jobs'. Kotak said that areas like education, healthcare and security services have immense scope for job creation. He said that there is a need to look at jobs not just for salaries but for driving self-employment.    

"We frankly need fewer public sector banks which may happen through mergers and shrinkage," Kotak said.

Reflecting on the relation between banking capital and job creation in the past, Kotak said, "If you look at industry before 10-15 years, it focused on putting more capital, most of the time banks' capital, and disproportionate focus was on capital as the basis of growth. So jobs were not happening at the speed with which the capital allocation was happening. So your capital output ratio and capital to job ratio were extremely perverse."

Speaking on the initiatives taken by the government to create more jobs, Kotak said, "There are a few suggestions that the industry has given to the government, and the government has implemented like there is a tax incentive which for every job you create for 240 days in a year under Section 80JJA."

"In the traditional lala industries, they are in a bit of shock, and that is where we are seeing negative jobs. Flipkarts, Olas and Ubers of the world are creating the jobs. But the old industry is destroying the jobs," Kotak added.