The revolutionary 4% rule that made Uday Kotak the richest banker in the world.
Uday Kotak turned down an offer to join the family business of stock broking to work with HUL.
His ideas revolved around many different industries, but in the end, he settled on financial services.
Back in the 1980s, banks used to give 6% interest on savings accounts, but lend them at 18% interest.
He saw the opportunity to build a legacy.
He asked his family and friends to lend him money with an offer of giving them 12% interest.
With some patience and persistence, Kotak convinced them.
Nelco, a Tata company, used to borrow short-term credit from banks at 17% interest.
He offered Nelco the same amount of money at 16% interest.
Nelco accepted Kotak's offer and became its first customer.
Thus, friends and family were happy because they were getting double the bank interest and their money was with the Tata company.
Nelco was happy to pay less interest on loans.
And the happiest of the happy?
He was the one and only Uday Kotak!
He was making 4% from the deposits and loan spread.
In the early 2010s, Uday Kotak became the richest banker in the world.
I wish to get the golden days back where Kotak can give 12% interest. 😜