The Reserve Bank of India (RBI) has approved Kotak Mahindra Bank's acquisition of Sonata Finance Pvt Ltd and making it a business correspondent subsidiary, the private lender said in an exchange filing on October 20.
"The RBI has, vide its letter dated October 19, 2023 received by the Bank on October 19, 2023, conveyed its approval to the Bank, for acquiring 100 percent of the issued and paid up capital in Sonata, as mentioned above, and to make Sonata a Business Correspondent subsidiary of the Bank," the exchange filing said.
Sonata Finance will now be a wholly owned subsidiary of the bank.
On August 28, Moneycontrol was the first to write that Kotak Mahindra Bank was hopeful of getting the nod for its acquisition of the Lucknow-based microlender Sonata Finance in this financial year.
“We are expecting the approval from the Reserve Bank of India on our acquisition of Sonata Finance before the end of FY24,” said Tapobrat Chaudhuri, President and Head of microfinance business of Kotak Mahindra Bank had said.
The country's fourth-largest private sector bank bought the microfinance company on February 10 in a Rs 531 crore all-cash deal. The bank plans to leverage Sonata Finance's network to provide a wider suite of products to its customers.
The company has 450 branches with 2,879 employees. At the end of FY23, its gross non-performing assets (GNPA) and net NPAs stood at 2.27 percent and 0.68 percent and advances of at Rs 1,859 crore.
Earlier, Kotak Mahindra acquired BSS Microfinance for Rs 139 crore in September 2016.
Several banks have recorded significant growth in the microfinance segment in the April-June quarter. Kotak Bank's microfinance business increased 91 percent to Rs 6,963 crore in June from a year earlier.
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