As Kotak Mahindra Bank marks three months of facing a ban on digital onboarding of customers, the private sector lender highlighted the impact the ban had on its unsecured loan book growth and margins during the April-June quarter (Q1FY25).
"As I mentioned in the last quarter's results, the RBI order would affect our 811 and credit card businesses. This has had some impact on unsecured book growth and consequently on net interest margin (NIM). However, we believe that when the embargo is lifted, we will come out even more strongly. If you take out the impact on the unsecured businesses and 811, the rest of the business grew very well," the bank's management said in their earnings conference call.
In the June-ended quarter, Kotak Mahindra Bank reported a 20 basis points (bps) sequential drop in its unsecured loan book growth to 11.6 percent from 11.8 percent. On the other hand, NIM remained flat quarter-on-quarter at 5.02 percent in Q1FY24, but was down 55 bps year-on-year from 5.57 percent in Q1FY23.
On April 24, 2024, the Reserve Bank of India barred Kotak Mahindra Bank from taking on new customers via its online and mobile banking channels and from issuing new credit cards. The central bank took this action after examining the country's fourth-largest private lender's IT systems in 2022 and 2023 and finding concerns that Kotak failed to adequately address information technology-related drawbacks.
When asked about the progress made in improving its IT systems, Kotak Bank said they are committed to completing the process efficiently.
"It is hard to predict when the RBI will approve the complete overhaul of our technology systems. But, we remain committed to finishing everything and are working on this with great determination. We will continue to perfect our tech systems with incredible gusto and mitigate this impact as soon as possible," the management stated.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
