A study of the evolution of Kotak Mahindra capital corporation into a bank

Abstract

During the later half of 1980’s and first half of 1990’s, there existed a huge gap between borrowing and lending rates. A lot of non-banking financial companies were emerging at that time to take advantage of this situation. There were 7063 NBFCs in 1981 which has increased to 33520 in the year 1991 and then to 519291 in the year 1996. Kotak Mahindra was among one of them. The liberalization of the economy was the key driver for such rapid expansion of NBFSc. They did fund business as well as merchant banking activities. With a high demand for finance and very minimal entry barriers (regulations), everyone wanted to enter into this business and own a finance company. Next 15 years saw a tremendous change in financial business in the country summed up with period of crisis and regulatory laws. Kotak was one company which not only survived those years but grew in leaps and bounds. In the year 2006, Kotak Mahindra was the only non-banking financial that started up in the 1980s to still exist. Not only Kotak survived but was the single financial firm of the 1980s which were not overtaken by any foreign player. Kotak Mahindra grew itself over the years into an integrated financial firm offering variety of financial services such as broking, leasing, insurance, banking, mutual funds and plenty of other services.