India's Kotak Mahindra Bank to add up to 200 branches in FY25, official says
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India's Kotak Mahindra Bank will increase its pace of opening new branches and add about 175 to 200 branches in the financial year 2024-25, a senior official at the bank said, months after the central bank barred the private lender from sourcing new customers digitally.
In April, the Reserve Bank of India (RBI) stopped Kotak from adding new customers via its online and mobile banking channels, and from issuing new credit cards, due to information technology-related deficiencies.
"We have been adding roughly 150 odd branches for several years now. This year too, the momentum is going to continue," Virat Diwanji, group president and head - consumer bank, told Reuters in an email interview on Monday.
India's fourth-largest private lender will target the pockets where there is easy availability of deposits, the official said, adding that customer acquisition through branches is seeing good traction.
Before the RBI's order, Kotak was heavily reliant on digital channels to source new clients.
About 95% of its new personal loans by volume were disbursed digitally in the October-December quarter, while it issued 99% of new credit cards through digital channels. A similar breakup for the January-March quarter is not yet available.
Kotak's branch addition plans may not immediately help source new customers, but the strategy may play out in the medium-to-longer term as it will increase its presence and reach, said Kranthi Baithini, director of equity strategy at WealthMills Securities. However, that will come with high overhead costs, he said.
Meanwhile, the bank is working "steadfastly" to fulfill the RBI's requirements and return to business as usual, Diwanji said.
The private lender has stepped up investments to fortify its IT systems, including steps to strengthen its digital payment security controls and meet regulatory data cybersecurity standards, he added.
Kotak has hired over 530 employees in the last 12-15 months, a majority of them from tech backgrounds, he said.
The bank's focus on personal loans and business loans will continue, Diwanji said.
