Kotak Mahindra Bank is demonstrating resilience for the challenges posed by the RBI restrictions

Kotak Mahindra Bank is poised to aggressively expand its physical presence by targeting the opening of 170-200 branches in FY25

Under the strategic guidance of Virat Diwanji, Kotak Mahindra’s Group President and Head of Consumer Banking, this move is a direct response to the Reserve Bank of India’s (RBI) restrictions on the bank’s digital customer acquisition and credit card operations, which were imposed due to detected weaknesses in its operational risk management. Diwanji has outlined the bank’s focus on leveraging its existing customer base, particularly in the unsecured loans segment, which aims for a 15-16% year-on-year growth. The bank will enhance the productivity of its branch staff through data analytics and better quality leads, partially compensating for the digital acquisition shortfall. To grow its CASA (current account and savings account) deposits, Kotak Mahindra Bank is implementing several strategies. These include increasing customer acquisition through physical channels, improving customer service and engagement, and encouraging customers to make Kotak Mahindra Bank their primary bank account by using services like systematic investment plans (SIPs), utility bill payments, and EMI payments. The bank has also relaunched its “Active Money” ad campaign to boost CASA deposits. Despite the challenges posed by the RBI restrictions, KMB remains resolute in its commitment to maintain robust growth in its unsecured loans portfolio. The bank will focus on customer engagement through loyalty programs and value propositions to increase credit card usage.

Branch expansion remains a priority, with plans to add 175-200 branches in FY25, continuing the momentum of previous years. This expansion is targeted at under-penetrated areas with significant business communities and rural regions experiencing infrastructure development and urbanization. Kotak Mahindra’s retail business segments, including mortgages and business banking, have shown strong performance. The mortgage book exceeded Rs 1 lakh crore in Q4 FY24, driven by rapid infrastructure development and urbanization. The SME sector is also contributing positively to lending growth. The mortgage lending business, comprising home loans and loans against property, continues to grow at 15% year-on-year. The bank is capitalizing on demand from tier 2 and 3 cities by investing in manpower and technology. It also uses analytics to predict customer requirements and smooth transactions, such as auto-renewals and pre-approved limits. Additionally, Kotak Mahindra Bank is designing products for specific sectors like healthcare and renewable energy, anticipating significant growth in these areas. Kotak Mahindra Bank is demonstrating remarkable resilience in the face of the challenges posed by the RBI restrictions. The bank is adopting a multifaceted strategy, focusing on physical branch expansion, customer engagement, and leveraging advanced analytics to drive growth across its various business segments. This steadfast approach instills confidence in the bank’s ability to navigate these restrictions and continue its upward trajectory.