Kotak Mahindra Bank Resumes Unsecured Lending Growth: Prioritizes Asset Quality Over Rapid Expansion

Kotak Mahindra Bank Resumes Unsecured Lending Growth: Prioritizes Asset Quality Over Rapid Expansion​

Business Segments Return to Growth in June Quarter​

Kotak Mahindra Bank announced a strong return of growth across several key lending businesses during the June quarter. This includes credit cards, personal loans, unsecured business loans, and microfinance. All these segments have shown improved performance on both sequential and year-on-year metrics.

Group Chief Financial Officer Devang Gheewalla emphasized that while growth is returning, the bank has no intention to rush its expansion. He stated that unsecured business lending requires careful balance. The strategy must ensure good growth while maintaining proper credit costs and preserving profitability.

Mitigating Risk in Microfinance Segment​

In the microfinance sector, Kotak Mahindra Bank is proactively managing potential risks associated with incremental lending. The bank has secured 100 percent coverage under the Credit Guarantee Fund for Micro Units (CGFMU). This measure is designed to mitigate any future credit risks that might arise from increased lending activities in this segment.

Strengthening Funding Stability through Deposit Mobilisation​

The bank is actively working to improve its funding structure by ramping up the mobilization of foreign currency non-resident (FCNR-B) deposits. These efforts are specifically targeting participation under the Reserve Bank of India's special swap window.

Three-year and five-year FCNR-B deposits hold significant strategic value for Kotak. They will help lengthen the bank’s current short-tenor deposit profile. This shift in maturity can improve funding stability within the institution.

International Strategy to Attract NRI Deposits​

Kotak plans a multi-pronged international strategy to attract Non-Resident Indian (NRI) deposits. The bank aims to leverage its established presence in GIFT City and the Dubai International Financial Centre (DIFC).

To maximize deposit attraction, Kotak is forging partnerships with various banks across Asia and the Middle East. These partnerships are aimed at broadening the reach and stability of their funding base.

Management Commentary on Deposit Targets​

Managing Director and Chief Executive Officer Ashok Vaswani confirmed that discussions with potential partner banks are progressing well and are at an advanced stage. However, he deliberately declined to disclose any specific deposit mobilisation targets or the amount raised so far.

The management added that securing these long-tenor deposits will provide additional flexibility. If funding inflows accelerate faster than expected, it would allow Kotak to expand its investment book accordingly.