'More Worried About Reputational Impact Than Financial Impact,' Says Kotak Mahindra Bank CEO On RBI Curbs
RBI's order has had an impact on the franchise and reputation, he said. In particular, the credit card business and Kotak 811 will be the most affected.
Kotak Mahindra Bank is more worried about reputational impact than the financial impact due to the Reserve Bank of India's curbs, said Chief Executive Officer and Managing Director Ashok Vaswani.
"Frankly, I'm more worried about the reputational impact than the financial impact ... financial impact, in the scheme of things, will be relatively small," he said while responding to media queries after the fourth-quarter results.
RBI's order has had an impact on the franchise and reputation, he said. In particular, the credit card business and Kotak 811 will be the most affected.
However, the bank is committed to coming back stronger. "We want to utilise this period to focus on existing customers, enrich the experience and deepen the relationship with customers," he said.
Explaining the bank's strategy for responding to the RBI's curbs, Vaswani said that they are seeking guidance from regulators on building systems while staying invested in capacity building towards risk and resilience.
"... the efforts fell short of meeting regulators's expectations ... We are in continuous dialogue with the RBI and seeking their guidance on reaching expected outcomes," he said.
Vaswani said that RBI's curbs will have a limited impact on the bank's liability growth.
In addition, Shanti Ekambaram, deputy MD of Kotak Mahindra Bank, stated that the bank has a customer base of 2.4 crore under the 811 product. But the idea now is to focus on cross-selling more.
"...since we were adding customers at a higher pace, the cross-sell numbers have been lower... We will want each customer to have at least 2–3 products," she said.
Responding to a query on Jay Kotak's future at the bank, Ekambaram said that he will continue to remain the co-head of Kotak 811.
"Jay Kotak is the co-head of 811, not the sole leader... 811 has a lot of work to do in terms of deep-selling... Jay will continue to remain the co-head of the product," she said.
Further, Vaswani also added that the bank was working closely with the regulator to appoint an external auditor for the curbs that have been put in place.
On April 24, the RBI directed Kotak Mahindra Bank Ltd. to immediately stop the issue of fresh credit cards and the onboarding of new customers through its online and mobile banking channels.
The RBI also stated that it will review its restrictions after the bank itself commissions a "comprehensive external audit".
