Kotak Mahindra Bank stock loss erodes Rs 4,281 crore from mutual funds

As of March 2024, 36 mutual funds hold Kotak Mahindra Bank stock, with an aggregate holding of around 25.63 crore shares valued at over Rs 47,229 crore.

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26 Aug, 2025 12:21

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Mutual funds suffered a loss of Rs 4,281 crore as the Kotak Mahindra Bank stock plummeted 10 percent after the RBI slapped a ban on customer onboarding through online and mobile banking and issuing of credit cards.

On April 24, the RBI banned Kotak Mahindra Bank from adding new customers online or through mobile banking and from issuing new credit cards, due to tech platform concerns after a two-year examination.

As of March 2023, SBI Mutual Fund holds the largest stake in Kotak Mahindra Bank with approximately 7.52 crore shares valued at Rs 13,855 crore, now down to Rs 12,600 crore, losing over Rs 1,200 crore. UTI Mutual Fund, HDFC Mutual Fund, and ICICI Prudential MF follow. UTI MF lost around Rs 486 crore, HDFC MF lost Rs 462 crore, and ICICI Prudential MF lost Rs 461 crore.

As of March, 36 mutual funds hold Kotak Mahindra Bank stock, with an aggregate holding of around 25.63 crore shares valued at over Rs 47,229 crore.

Investors' wealth eroded by over Rs 35,200 crore after the Kotak Mahindra Bank stock declined 10 percent, its sharpest fall since 1 April 2020, following the regulatory action.

Macquarie sees the ban as a major setback for Kotak Bank, impacting its digital customer acquisition heavily. The bank's 811 digital platform witnessed significant savings account openings and processed most unsecured products digitally, outpacing overall growth with a 40 percent increase in the nine months of FY24, compared to 18 percent overall.

Citi analysts expect the RBI actions to affect the bank's growth, net interest margin (NIM), and fee income, giving a 'neutral' call with a target price of Rs 2,040 per share. Jefferies downgraded Kotak Mahindra Bank to 'hold' post-ban, lowering the target price to Rs 1,970 per share. They anticipate a resolution process similar to HDFC Bank's, which took nine to 15 months. If Kotak's process extends beyond six months, it could impact revenues and costs.

Macquarie predicts medium-term growth hindrance due to the ban on digital onboarding and the bank's limited branch expansion, suggesting a potential de-rating similar to HDFC Bank's experience. They maintain a ‘neutral’ call with a target price of Rs 1,860 per share.

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