Uday Kotak Profile: All About The Man Behind India's First NBFC That Became A Bank — IN PICS

Founded in 1986 as an NBFC with “3 employees”, Kotak Mahindra Finance Ltd has become one of the leading financial and banking sector institutions in India. Behind this is the man who wanted to make a Goldman Sachs or JP Morgan for India, Uday Kotak. Today, Kotak Mahindra Bank is worth around Rs 300 crore as Uday Kotak steps down as its MD and CEO. As per Bloomberg Billionaires Index, Uday Kotak has a net worth of about $13.4 billion. (Image Getty)

In 1986, Uday Kotak founded Kotak Mahindra Finance Ltd. with an initial investment of Rs 30 lakhs, holding a 50 per cent stake at the age of 26. He seized the opportunity to offer working capital to Tata subsidiary Nelco, providing credit at a rate lower than the prevailing bank rates, during an era when banks operated with a substantial spread between deposit returns (6 per cent) and loan interest rates (17 per cent). (Image: Getty)

He roped in Anand Mahindra, a young Havard graduate, serving as the general manager (commercial) of Mahindra Ugine at the time. Uday proposed to use their names for the company like Goldman Sachs, JP Morgan, Morgan Stanley, and Lehman. Later in 2003, it transformed into a commercial bank, becoming the first Indian company to do so. (Image: Getty)

Over time, Kotak Mahindra Group diversified into stock broking, investment banking, car finance, life insurance, mutual funds, and other sectors. In 1995, Kotak separated brokerage and distribution into Securities and established Kotak Mahindra Capital Company for investment banking. Then, in 1998, he entered the mutual fund industry with Kotak Mahindra Asset Management Company. (Image: Getty)

Uday Kotak, one of India's longest-serving CEOs in the financial services sector, has also faced several regulatory challenges. In 2008, the RBI asked Kotak Mahindra Bank to reduce the promoter's shareholding to 10 per cent, even though the initial mandate was to maintain a minimum of 49 per cent. This sparked a prolonged disagreement between the bank and the RBI. (Image: Getty)

In 2018, the RBI insisted on reducing the promoter stake to 20 per cent. The bank agreed but proposed issuing preference shares instead of equity shares, which the RBI opposed. Kotak Mahindra Bank took an unprecedented step by taking the RBI to the Bombay High Court, challenging the regulator's authority to dictate promoter shareholding in banks. (Image: Getty)

In 2020, the RBI proposed to limit a promoter-CEO's tenure to 15 years with extensions. This rule compelled Uday Kotak to step down as CEO. In April, Kotak Mahindra Bank appointed Uday Kotak as a non-executive director on its board after his retirement as CEO, exploiting a regulatory gap that didn't require RBI approval. The RBI is reportedly encouraging the bank to appoint an outsider as its next CEO.