Kotak Mahindra Bank will acquire the personal loan book of Standard Chartered Bank India, which has a total outstanding of around Rs 4,100 crore, in an effort to expand its retail lending business.
The proposed deal, announced by Kotak Bank on October 18, will consist of loans classified as 'Standard Loans', and is expected to be completed over next three months, subject to regulatory approvals. These are loans that are performing well and not showing any signs of distress or default. Kotak Bank will be acquiring the loan book that will be outstanding closer to the completion date for the deal.
Kotak Bank said is hoping to align the acquisition to its strategy to drive growth, expand market share and unlock opportunities in the 'Salaried Affluent' segment.
Kotak Bank - India's fourth largest lender in terms of market capitalisation - said the unsecured credit market offers a 'significant growth potential', especially in the higher-end segments.
"This transaction supports our Retail Assets growth strategy and reinforces our commitment to retail lending. It provides access to a high-quality customer base, and with Kotak Group’s successful integration track record, we are committed to a smooth transition," Ambuj Chandna, Head-Products, Consumer Bank, Kotak Mahindra Bank said.
Kotak Bank is hopeful that the high-quality loan book from Standard Chartered Bank will allow it to build the affluent segment further, and reinforce its position in retail lending.
Standard Chartered Bank has assured a smooth transition for the customers, and will be focusing on the wealth and investment banking business in India, going forward.
"Our decision to divest the personal loan book is in line with the Bank’s focus to accelerate growth in the wealth, affluent and SME segment. India continues to be a key market for Standard Chartered network, with Wealth & Retail Banking (WRB) and Corporate & Investment banking (CIB) as the cornerstones and we will continue to invest and grow in India," Aditya Mandloi, Head – Wealth & Retail Banking, Standard Chartered Bank, India & South Asia said.
India's personal loan market has increasingly become competitive as consumer demand has grown. The central bank had in 2023 asked banks to set aside more capital for personal credit, as concerns emerged over the risk of default. This has moderated banks' outstanding personal loan book compared to a year ago.
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