Kotak Mahindra Bank expects its commercial banking business to grow more than industry during the current financial year. The private lender is also hopeful of growing its commercial vehicles, construction equipment, microfinance and gold loan segments faster compared with the respective industries.
“Banking credit will grow faster and we will continue to grow faster than the industry. Whether it is commercial vehicles, construction equipment, microfinance or gold loans, we will grow faster than their respective industries in all these business verticals,” Manish Kothari, president and head, commercial banking, Kotak Mahindra Bank, told FE.
In each of these businesses, the bank is expecting to expand its market share. Retail advances account for more than half of the total commercial banking vertical, which had a loan book of Rs 81,000 crore as of September 30, 2023.
“Credit appetite in semi-urban and rural India is increasing, led by consumption and economic growth, and it is brimming with opportunities for commercial banking. We are geared to capitalise on this,” Kothari said.
Advances for construction equipment and commercial vehicles reached Rs 31,000 crore at the end of the second quarter of the current financial year. The overall macroeconomic environment and the government’s focus on infrastructure have boosted the construction equipment and commercial vehicles segments, resulting in an increased appetite for loans. Out of the total Rs 31,000-crore loan book, the share of commercial vehicle advances is nearly Rs 17,500 crore while construction equipment loans account for Rs 7,500 crore.
“Microfinance and gold loans have grown faster in the past because our base was smaller,” he explained.
On strategy, Kothari said the growth will not be entirely dependent on branch expansion as the bank is leveraging technology to grow its businesses. “We are consistently investing in technology to make a difference at the front end. Loan applications flow through an app, collections happen through an app, so the dependence on branches is not much.”
Explaining the use of technology, he said a large percentage of bank’s customers is performing transactions using digital banking. However, the bank will continue to open branches despite the rise in the use of technology. “Customers are going digital at a much faster pace than what we think. However, physical branches are needed to build the trust among customers.”
