Kotak Bank shares gain after CCI approves acquisition of Standard Chartered's personal loan book

This acquisition is also the first major transaction under the leadership of Ashok Vaswani

Shares of Kotak Mahindra Bank gained by nearly a percent to Rs 1,798 apiece on November 27, following the Competition Commission of India's (CCI) approval for the bank to acquire the unsecured personal loans portfolio of Standard Chartered Bank's India unit.

The CCI confirmed in an official statement that it had approved the "proposed combination involving the acquisition of a standard unsecured personal loans portfolio of Standard Chartered Bank, India Branch by Kotak Mahindra Bank."

Kotak Mahindra Bank had initially announced this acquisition in October, agreeing to purchase Standard Chartered's India personal loan book for Rs 4,100 crore. This move is part of Kotak's strategy to bolster its presence in the retail credit market and drive customer-centric growth. The acquisition will help the bank scale up its operations and increase its focus on the affluent salaried segment of customers.

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The acquired loans are categorised as standard assets, further aligning with Kotak Mahindra Bank's plan to accelerate growth and expand its market share. This transaction also marks a significant milestone, as it is one of the most notable deals in recent years involving an Indian private sector bank acquiring assets from a foreign lender.

This acquisition is also the first major transaction under the leadership of Ashok Vaswani, who took over as Kotak Mahindra Bank's Managing Director and CEO on January 1. Previously, under the tenure of Uday Kotak, the bank had explored the possibility of acquiring Citibank's India consumer business, including its credit card division, but Axis Bank ultimately secured that deal.

However, Kotak Mahindra Bank’s recent operations have faced regulatory scrutiny. In April, the Reserve Bank of India (RBI) imposed restrictions on the bank, barring it from onboarding new customers via digital channels and issuing fresh credit cards. These measures were implemented due to deficiencies identified in Kotak Mahindra Bank's IT systems.

In an October interview with CNBC-TV18, the private lender said that they are actively working to resolve the digital infrastructure shortcomings identified by the Reserve Bank of India. "We’ve been in continuous touch with the RBI, sometimes even every week, getting their guidance and ensuring we’re on the right path," said Managing Director and CEO Ashok Vaswani.

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