KMFL has also set up a committee to consider the recent guidelines of the Reserve Bank of India (RBI) for non-banking finance companies (NBFCs) to convert themselves into a bank. A final decision in this regard will be taken by this fiscal-end.

All business interest of KMFL vice-chairman, Uday Kotak, in the financial services business after the proposed merger will be only through KMFL. Mr Kotak's holding in KMFL will increase to be about 54 per cent after the merger. Currently, it is about 40 per cent. Post-merger, the issued share capital of KMFL will increase to Rs 59.21 crore from Rs 45.91 crore. The terms of the merger were based on the reports of the Deloitte Haskins & Sells, and VC Shah & Co.

"The merger will help KMFL realise two goals - first, it will help complete the capital market business model, thereby making KMFL a dominant player in the capital market. It will also help to create stronger synergies between the other retail and asset finance customer segments of KMFL,'' KMFL vice-chairman Uday Kotak, said. Kotak Securities recently launched an online broking business - kotakstreet.com - which has over 7,000 registered users at present.

For the year ended March 31, 2000, Kotak Securities, along with its fully-owned subsidiary, recorded a revenue of Rs 77 crore. The profit before tax was Rs 59.3 crore and a post-tax profit of Rs 36.4 crore. Its future plans include expanding the retail business, adding new branches, focusing on wealth management and advisory services for high-networth individuals and increasing the client base for online and offline secondary market broking.

KMFL also proposes to acquire the forex broking business of Uday Kotak. KMFL has a presence either directly or through its subsidiaries, in asset financing, investment banking, and mutual funds.

With its entry into life insurance and broking and distribution business, KMFL will expand its product range, offering a full bouquet of financial products. On banking, Mr Kotak said a panel has been set up to consider three broad options - opt for a new bank; KMFL converts itself into a bank; and KMFL acquires an existing bank. We have a full team to review the options". Meanwhile, KMFL has received the licence for life insurance business named Old Mutual Kotak Mahindra (OMKM). KMFL will hold 74 per cent (Rs 74.74 crore) and Old Mutual 26 per cent (Rs 78.29 crore). It plans a soft launch by mid-February.