Nilesh Shah, now at the helm of Kotak Mahindra Asset Management, carved his way to leadership through determination. In a candid conversation with Ajay Lakhotia, Nilesh shared how losing his father early on pushed his mother to shoulder the family’s future, working tirelessly to provide for them. These circumstances taught Nilesh that perseverance in the face of adversity is what defines a person.
In academics, he stood out. Earning scholarships and excelling in Chartered Accountancy (CA), he became a gold medalist. While financial constraints narrowed his options, the CA programme allowed him to balance learning with earning. His entry into ICICI was humbling. Despite academic honours, the corporate world required a new set of skills—he had to familiarise himself with English and navigate the basics of technology.
These early experiences instilled in him humility and the importance of staying adaptable. The lessons he absorbed shaped his leadership style. For a deeper look into his approach to mutual fund investing, read on.
Investment awareness in Indian culture
During the podcast, Ajay Lakhotia posed a question on how he feels of our education system or cultural fabric on teaching people how to invest.
In India, financial habits have typically centred around saving rather than building assets. From childhood, individuals are encouraged to store value in gold or fixed deposits. Yet, the concept of multiplying money through strategic choices in the market often goes untouched. The formal education system amplifies this gap, focusing on career preparation while neglecting essential life skills like managing money effectively.
Nilesh Shah provided an interesting take on this. He noted that Indian culture segments life into phases. While the Brahmacharya phase focuses on acquiring knowledge, it rarely includes financial literacy. Earning and saving take priority during Grihastha, but the idea of growing one’s resources is often sidelined. Consequently, many adults are left uncertain about where to place their funds, lacking proper education on how to make their money grow.
Shah highlighted an eye-opening trend from FY21 to FY23. Despite ₹6 lakh crores flowing into stocks and funds, ₹9 lakh crores remained parked in cash—frozen assets generating little return. People continue to funnel their earnings into areas that don’t combat inflation, mistakenly believing in their safety.
Shah observed that this cultural pattern contributes to a lack of insight into how assets can be grown. Families may emphasise accumulating funds but seldom discuss how equities, mutual funds, or other instruments can create financial stability. With inflation constantly eroding value, relying purely on traditional methods is no longer enough.
If 93% of household reserves are still stuck in low-growth options, the need to rethink financial priorities has never been more urgent. According to Shah, a balanced approach is necessary—honouring both Lakshmi (wealth) and Saraswati (wisdom).
Also read: Unlocking prosperity: The transformative power of financial literacy
Challenges of the Indian financial market and the role of SEBI
Ajay Lakhotia asked Nilesh Shah about the hurdles India’s financial ecosystem has faced over time. Shah explained that, historically, the Indian markets resembled the “Wild West”—unregulated, unpredictable, and often unsafe for investors. Payment defaults were frequent, insider trading was not only legal but rampant, and price manipulation was common. In such an environment, transparency was rare, and investor confidence was fragile.
The Securities & Exchange Board of India- SEBI has been a game changer in bringing order to this once-volatile space. Shah credited the regulator for implementing strong frameworks and establishing stricter rules, which gradually created a safer and more predictable space for capital investment. However, new problems have emerged. Insider trading remains a serious concern, yet SEBI’s powers are limited. Unlike its U.S. counterpart, SEBI doesn’t have the authority to wiretap or monitor suspicious communications, making it challenging to address illicit activities occurring in private channels.
Even with these limitations, SEBI has had successes, notably through initiatives like the ‘Mutual Funds Sahi Hai’ campaign, which raised awareness and encouraged smarter financial choices. However, to tackle evolving risks and ensure continued progress, SEBI requires enhanced authority to enforce rules more effectively.
To know more: SEBI’s quasi-powers: Keeping India’s securities market ethical
Why are mutual funds “Sahi”?
The ‘Mutual Funds Sahi Hai’ campaign reshaped the perception of wealth-building in India. It has encouraged a broader shift from traditional saving habits to more sophisticated financial strategies. With this initiative, investors are not just more informed but have also started making more confident and informed financial decisions.
Nilesh Shah likens mutual funds to a well-balanced meal. Just as a good diet requires a mix of nutrients—proteins, carbs, and minerals—a robust financial plan needs variety too. Relying solely on one asset type, such as direct equity or gold, may provide some immediate advantages but lacks the resilience that comes from spreading your investments across multiple areas. Mutual funds do this seamlessly by incorporating stocks, bonds, and commodities into a single, managed portfolio.
Take the example of gold, deeply entwined with Indian customs. Families often purchase small amounts for occasions like Akshaya Tritiya or weddings. Yet, such transactions can come with significant hidden costs. Instead, Nilesh suggests exploring Gold ETFs or Sovereign Gold Bonds through a mutual fund, which eliminates excessive fees while maintaining flexibility and ease of exit.
By leaving complex decisions, such as where and when to invest, to professional managers, mutual funds offer an efficient way to allocate assets while controlling risks. They spare individuals from the daily grind of market monitoring, offering a structured and expert-led pathway to grow capital.
Mutual funds are “right” because they offer a smarter way to diversify and grow financial assets without putting undue strain on the investor. They help ensure that your wealth is protected and steadily increasing, as Shah explains, with a professional’s expertise at the helm.
Also read: SIP investment: Your path to wealth building
Key investment lessons from mythology: Ramayana and Mahabharata
Nilesh Shah cleverly bridges ancient Indian mythology and modern financial principles, illustrating how timeless wisdom can guide today’s investment strategies. He uses stories from the Ramayana and Mahabharata to highlight two crucial aspects of wealth-building: persistence and overcoming self-sabotage.
In the Ramayana, Lanka gleams with wealth, while Ayodhya—though virtuous—does not. Shah attributes this contrast to the “Kumbhakarna Model.” The people of Lanka, like Kumbhkarna who slept for 14 years, let their resources sit and accumulate over time. Meanwhile, the people of Ayodhya were restless, constantly trading without allowing their assets to appreciate. The takeaway? Letting investments mature without interference can turn even modest efforts into substantial returns.
In the Mahabharata, Duryodhana’s dilemma—”I know what is right, but I cannot follow it”—mirrors a common struggle for investors. We often understand the value of consistent, disciplined strategies but fall victim to impulsive decisions or short-term distractions. This internal conflict, much like Duryodhana’s, is what often stands in the way of sound financial judgement.
Financial freedom and the road ahead
Ajay Lakhotia asked Nilesh Shah about financial freedom, especially in the context of millennials and the FIRE (Financial Independence, Retire Early) movement. Nilesh Shah offered deep insights into why it’s essential for everyone, especially younger generations. He pointed out that relying on others for financial support, as previous generations often did, may not always be viable. Having personal control over one’s economic future ensures stability, regardless of circumstances.
Shah noted that gaining autonomy over your finances provides more than just wealth—it offers the ability to make life decisions without constraints. It’s about using your time wisely and focusing on what matters most without constant worries about money. Once time is lost, it’s gone forever, and having financial security allows you to spend it meaningfully.
India’s evolving economy is fertile ground for those looking to grow their wealth. As the nation moves forward, thoughtful and strategic investment isn’t just a path to individual success—it’s also a contribution to the larger narrative of the country’s economic rise
Bottomline
Nilesh Shah to Kotak’s path showcases the power of resilience and groundedness, guiding both his life and professional choices. His evolution from a modest background to leading a major mutual fund house demonstrates that consistent effort and a clear vision are crucial to achieving financial goals.
Shah emphasises the significance of thinking beyond immediate gains. By maintaining focus, expanding financial knowledge, and planning strategically, individuals can avoid impulsive moves that might derail their progress. With India’s expanding market, he suggests that aligning personal growth with the country’s trajectory can be highly rewarding, especially through mutual fund investments.
