With regulatory curbs on Kotak Mahindra Bank’s online and mobile banking channels still in place, the private sector lender is relying on physical branches to source new customers.

The bank will add up to 200 branches in FY25, around 20% higher than fresh branch additions in 2023-24. The bank had opened 168 branches in 2023-24. While it is also planning to increase front-end staff at every branch, Kotak Bank did not disclose the expected increase in headcount for the current financial year.

The total branch count stood at 1,948 as on March 31. Around 45% of branches are located in metros.

“We have focused on improving productivity of our frontline branch staff through data analytics, providing better quality leads to our ground team and enhancing quality of new customers being acquired,” Virat Diwanji, group president and head of consumer banking, Kotak Mahindra Bank, said.

Diwanji acknowledged that it might not be possible to cover the gap purely on the number of customers acquired digitally. However, the bank is looking to considerably bridge the value gap by driving higher numbers through physical sales force at branches, focusing on customers with higher potential value and deepening the relationship value of existing customers. The bank will actively use ‘One-Kotak’ for inter-group synergies and cross-sell opportunities.

On April 24, the Reserve Bank of India (RBI) directed Kotak Mahindra Bank to stop onboarding new customers through its online and mobile banking channels and issuing fresh credit cards. However, the bank can continue to provide services to existing customers.

In its directive, the RBI explained that serious deficiencies and non-compliances were observed in the areas of information technology inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and disaster recovery rigor and drill.

“The RBI has clearly defined what we need to achieve to go back to business as usual. We are fully committed to meeting these requirements and are working steadfastly to fulfilling it as quickly as possible,” Diwanji said.

Earlier, the bank said it was planning to expand the technology workforce by hiring around 400 engineers in the current fiscal.

Currently, Kotak Mahindra Bank is the fifth-largest credit card issuer in the country. The number of outstanding credit cards stood at 6 million as on April 30.

“While we cannot issue fresh credit cards, we already have a strong base. Our focus will be to enhance customer engagement through multiple propositions that offer immense value to our customers, and thereby increasing the overall spends on cards,” he said, adding that the bank is focusing on travel cards for foreign currency amid the ongoing travel season.

The restrictions on the bank’s online and mobile banking channels have come at a time when many lenders are harnessing the digital route to garner low-cost current account savings account (CASA) deposits. The bank’s CASA ratio fell to 45.5% as on March 31, from 52.8% a year ago.

In a bid to improve the CASA ratio, Kotak Mahindra Bank is focusing on increasing both the number and quality of customers acquired via physical channels. Also, the bank is looking to enhance customer services and engagement to ensure that customers do not move their money out of the bank.

“We have relationship managers engaging with customers to make Kotak Bank their primary account. This includes encouraging customers to subscribe to services like SIPs, utility bill payments and EMI payments through their Kotak Bank accounts,” Diwanji said.