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Uday Kotak terms coronavirus lockdown as Abhimanyu's Chakravyuh

Kotak talked about handling the exit of the lockdown in a gradual and calibrated manner. "It will have economic costs while the country deals with the virus."

twitter-logoAnand Adhikari | May 13, 2020 | Updated 18:42 IST
Uday Kotak terms coronavirus lockdown as Abhimanyu's Chakravyuh
Uday Kotak

Billionaire banker Uday Kotak has an interesting analogy for the nationwide lockdown due to spread of the coronavirus. The 61-year old banker sees the COVID-19 lockdown as Abhimanyu's Chakravyuh.

In Mahabharata, Abhimanyu was trained in warfare and breaking into the Chakravyuh but didn't have any clue on how to get out.

"It is easy to get into the lockdown, but getting out (of the lockdown) is a more complicated process," said Kotak while interacting with the media after announcing the bank's results.

Globally, the world is cautiously exiting the lockdown. But it is a struggle as the chances of infection are high because of rising coronavirus cases.

The lockdown has exponential economic cost, said Kotak, which is a reality. In fact, the widespread losses in business because of lockdown has impacted everyone right from the government to corporate to individuals in terms of loss of employment etc.

"Every country in the world is dealing with it and so is India," said Kotak.

Kotak said the question is how we deal with the science problem and handle it in the real world and the economy.

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Kotak talked about handling the exit of the lockdown in a gradual and calibrated manner. "It will have economic costs while the country deals with the virus."

The government has already increased the borrowing target from Rs 7.8 lakh crore to Rs 12 lakh crore in 2020-21, which shows the revenue loss, the additional expenditure for social security schemes and also the need for pumping in more money to save the businesses. The Prime Minister has announced a Rs 20 lakh crore package which includes liquidity measures, among others. Meanwhile, Finance Minister Nirmala Sitharaman has announced the details of the package.

"I would like to see the break-up of how the Rs 20 lakh crore will be spent and I have no doubt that a reasonable portion would go to the bottom  of the pyramid and a fair amount for MSMEs," says Kotak.

Kotak said that by now it has been pretty clear that COVID-19 is not going away in a hurry. "We are still trying to find out the cure, but it doesn't look like that it's coming in a hurry. The vaccine seems to be 12-15 months away," says Kotak.

The focus area for the Kotak Group is balance sheet, which Kotak said is extremely important. The bank's focus is also on building a strong deposit franchise.  In terms of the lending book, the bank has always been cautious on unsecured lending. "The lending business is going to go through scrutiny," says Kotak. The bank will look at right sectors to lend in the post-COVID world.

There will be significant consolidation in the coming months and years . It has happened in telecom and airlines. Kotak now expects consolidation in the financial services business as well.

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