Guwahati: Kotak Mahindra Bank will accelerate the establishment of new branches, adding between 175 to 200 locations in the fiscal year 2024–2025 months after the central bank forbade the private lender from acquiring new clients online due to issues with information technology.
The Reserve Bank of India (RBI) barred Kotak from accepting new clients through its mobile and online banking platforms as well as from issuing new credit cards in April. The source stated that the fourth-largest private lender in India will concentrate on areas with simple access to deposits and that branch-based client acquisition is gaining traction.
Kotak was mostly dependent on digital platforms to find new customers prior to the RBI's directive.
It issued 99% of new credit cards through digital channels in the October–December quarter, while almost 95% of its new personal loans by volume were disbursed online. There isn't yet a comparable breakdown for the January–March quarter.
Although Kotak's intentions to open more branches may not help the company attract new clients right away, director of equities strategy at WealthMills Securities Kranthi Baithini believes that the strategy will benefit Kotak in the medium-to-long run by expanding its reach and presence. But it will come with a lot of overhead expenses, he noted.
The private lender has increased its efforts in strengthening its IT systems and has taken steps to satisfy regulatory data cybersecurity criteria as well as to improve its digital payment security controls.
In the previous 12 to 15 months, Kotak has hired around 530 people, the bulk of whom have backgrounds in technology.
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