Where’s the risk in banking?

Well when Indira Gandhi wanted to nationalize banks in 1969 she said if banks are in the private sector they will all lend to the same companies….and there would be concentration risk. Great. Post nationalization many frauds and scams happened. Latest is the Nirav Modi case – which would have WIPED out a private bank. Since it is a sarkari bank, it is alive. Great.

Now, if I know how to build a bank, and do build a big bank, RBI feels there could be concentration of ownership risk. Wow. So Uday Kotak, arguably one of the best bankers of today is told “You have to dilute your stake to REDUCE THE RISK”. Obviously this means there should be no Indian bank in the private sector. Sounds odd to me, what about you?

Well the case to quote is of course Ratnakar…..

Tell me why would a Cholamandalam Finance or a Bajaj ever want to be a bank?

If it is my bank, what is wrong in me trying to retain control? I will sell it when i want right?

Well now see what happens if LiC is asked to take over IDBI bank. Is there not a concentration risk? amuses me.

Now to say that Kotak gained Rs. 5000 crores by delaying the dilution is a sheer figment of imagination. Anyway that is how RBI decides to look at it.

If i were you, I would be worried about RBI’s understanding of the equity market and corporate governance.

The main reason why Indians do not follow rules is that the government makes rules. It puts a team in place to implement it. However, when it comes to wanting to dilute KB’s …to REDUCE STAKE..well well….