This Nelco Masterstroke Lead to Uday Kotak's Meteroric Rise In India's Banking Sector

In an exclusive interview with Republic Media Network Editor-in-Chief Arnab Goswami for the “Legends” series, Billionaire banker Uday Kotak delved into how his initative that started off as a financial advisory consulting firm pivoted quickly towards bill discounting, a key stepping stone towards beoming a household name in the banking world.

Founder of Kotak Mahindra Bank, Uday Kotak, said, "So, originally it started as a financial advisory consulting business, converted quickly to build discounting and there was a gentleman called Mr. Sidney Pinto, who actually made a big difference. He started merchant banking in India in Grindlays."

"He said, start your own bill discounting business. And we started with bill discounting for a company called NELCO, which was a Tata company where Mr. Ratan Tata started his career. So NELCO suppliers had a long way to get the money because of the working capital cycles. So we started discounting bills for suppliers of NELCO, which is 90-day bills," Kotak added.

Also Read: How a Cricket Injury Shaped Uday Kotak’s Journey to Banking

Kotak's firm had begun discounting bills for NELCO suppliers at a time when India was a closed economy and borrowing money from  banks woud usually attract 17 per cent interest rate.

Further shedding light on his bill discounting move, he said, "This is mid-80s, 1983 or so, '83-'84. So you would borrow money at 17 per cent, and if you gave money to your bank as a fixed deposit, they would pay you 6 per cent. So I went to some family friends and said that what if I gave you a Tata company risk and instead of 6 per cent you made 12? And I went to Nelco and said I will give you significant amount of money at 16 instead of 17."

Kotak would then leverage this oppurtunity to purchase a bill of exchange at 16 per cent and sell it to save his firm at 12 per cent with the Tata name on due date. This lead to the Tata subsidiary paying on the stipulated date, while the 4 per cent spread helped the banking stalwart built his business. 

 

This session was part of Republic Media Network's "Legends" series, an ongoing tribute series celebrating iconic Indians who have shaped the nation through excellence and inspiration. After powerful episodes honouring tennis icon Leander Paes and sarod maestro Ustad Amjad Ali Khan, this edition featured Uday Kotak, a visionary leader who transformed Indian banking and inspired generations of entrepreneurs.

Presented by Ravin Group and co-powered by Radico Khaitan and Reliance Digital, the session explored Kotak’s legacy, his views on India’s entrepreneurial ecosystem, and his belief that sustainable economic growth must be built on enterprise and innovation rather than speculative gains.