London, July 7 (ANI): Uday Kotak, the Managing Director of Kotak Mahindra Bank, one of India's top private sector banks, has cautioned Indian companies not to be too exuberant about buying overseas acquisitions, and saying that prosperity for the country's financial sector lay in domestic opportunities.
Commenting on Tata Steel's 6.7 billion pound takeover of Corus, the Anglo-Dutch steelmaker, last year, Kotak told the Financial Times that: "The Indian system, government and business, to a certain extent did fall prey to exuberance - which is now getting seriously affected."
Last year's six billion dollar takeover of Novelis, a Canadian aluminium maker, by Birla, he said is yet to prove a success. Tata Motors' recent 2.3 billion dollar acquisition of Jaguar and Land Rover was "a bold move", he added.
As far as Kotak Mahindra Bank is concerned, Uday said he would concentrate on expanding its 200-strong domestic branch network, with simple margin products that served the needs of the real economy, and expressed confidence that he would get "a high rate of growth."
Kotak said that the opportunities arising from domestic, and not foreign, consolidation were a "significant area of interest" for the bank, and that next year's federal elections could usher in a government prepared to lift a ban on private-sector banks acquiring majority stakes in state-owned banks.
The latter currently hold a 75 per cent of the nation's savings and boast the more extensive branch network.
After five years of strong domestic growth, India's largest privately owned banks remain well capitalised compared with their global peers and well positioned to survive a downturn, he said.
Kotak expressed his frustration at the conservative approach adopted by the Reserve Bank of India, his country's central bank, which insists that Indian banks are mandated to hold 25 per cent of deposits in government securities, while 40 per cent must be deployed in designated primary service areas such as agriculture. (ANI)
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