Kotak Mahindra Bank on Friday said it will buy Standard Chartered Bank’s personal loan business in India, a move that will help the country’s fourth-largest private bank strengthen its position in the affluent customer segment. Standard Chartered’s personal loan book in India had an outstanding balance of Rs 4,100 crore as of September 30, this year.
This deal is the first large acquisition by the private lender the under Ashok Vaswani, who took over as managing director and chief executive officer on January 1 this year. This transaction will also help the private lender recover from the loss of customer addition over the past few months through the online route. The Reserve Bank of India (RBI) had barred Kotak Mahindra Bank from onboarding new customers through digital channels and issuing fresh credit cards on April 24.
“The high-quality loan book from Standard Chartered Bank allows KMBL to build on its strength in the affluent customer segment and further reinforces its leadership in the retail lending space,” said the bank in a statement.
As of June 2024, Kotak Mahindra Bank’s personal loans, consumer durable loans, and business loans totalled Rs 20,317 crore, while credit card loans amounted to Rs 14,644 crore. As per the latest annual report, personal loans stood at Rs 13,074 crore as of March 31 this year.
This is the second major asset sale transaction between a domestic private lender and a foreign bank in recent times. Axis Bank completed the acquisition of Citibank’s India consumer business for Rs 11,603 crore in March 2023.
“India’s unsecured lending market offers significant growth potential for Kotak, especially in the higher-end segment,” said Ambuj Chandna, head – products, consumer bank, Kotak Mahindra Bank. “This transaction supports our retail assets growth strategy and reinforces our commitment to retail lending.”
The transaction is expected to be completed within the next three months, pending regulatory approvals and other closing conditions. “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,” said Aditya Mandloi, head – wealth and retail banking, Standard Chartered Bank, India & South Asia. “India continues to be a key market for Standard Chartered network, with wealth and retail banking and corporate and investment banking (CIB) as the cornerstones, and we will continue to invest and grow in India.”
Kotak Mahindra Bank has pursued inorganic growth since obtaining its banking licence in 2003. In 2014, the bank acquired ING Vysya through an all-stock deal, followed by the acquisition of BSS Microfinance in 2016. The private lender secured the RBI approval to fully acquire Lucknow-based Sonata Microfinance in October 2023.