RBI embargo hit credit card, unsecured business in Q3FY25, says Kotak Mahindra Bank

Kotak Mahindra Bank reported a net profit of Rs 4,702 crore in Q3FY25

Kotak Mahindra Bank delivered a steady performance in Q3FY25, driven by a 10 percent year-on-year (YoY) profit growth and stable net interest margins. However, the quarter was overshadowed by the Reserve Bank of India’s (RBI) restrictions, which have significantly impacted the bank's credit card, personal loans, and 811 digital banking businesses.

In its analyst call, the management acknowledged the strain caused by the RBI ban on its digital operations. Historically, the unsecured book—including credit cards, personal loans, and microfinance—has accounted for 15 percent of total assets. However, the crackdown has reduced this share to 10.5 percent, well below their target.

“Certain areas have been notably affected by the embargo. For instance, our credit card portfolio has de-grown quarter-on-quarter, which is disappointing. Additionally, the 811 business—a vital contributor to granular, low-cost deposits—has been significantly impacted. These deposits are critical in the current environment, making the embargo a considerable setback,” the management noted.

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Addressing the timeline for lifting restrictions, Kotak Bank highlighted ongoing engagement with the RBI. “We are in constant communication, providing regular updates. While most of the required work is complete, the RBI is conducting its own evaluations. We cannot predict the exact timeline for lifting the restrictions,” the management added.

According to the lender’s Q3FY25 investor presentation, credit card volumes contracted by 2 percent quarter-on-quarter (QoQ), while personal loans and consumer durable lending saw modest growth of 2 percent QoQ.

Kotak Mahindra Bank reported a net profit of Rs 4,702 crore in Q3FY25, marking a 10 percent YoY increase but a 7 percent sequential decline from Rs 5,044 crore in Q2FY25. Net interest income (NII) rose 10 percent YoY to Rs 7,196 crore during the quarter, underscoring consistent core performance despite external challenges.