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Kotak Mahindra Bank to Open 200 New Branches Despite RBI Restrictions

June 24, 2024

Kotak Mahindra Bank to Open 200 New Branches Despite RBI Restrictions

MUMBAI – Kotak Mahindra Bank, one of India’s leading private banks, plans to speed up the opening of new branches and add around 175 to 200 branches in the financial year 2024-25. This decision comes months after the Reserve Bank of India (RBI) stopped the bank from getting new customers online.

In April, the RBI stopped Kotak from adding new customers through its online and mobile banking channels and from issuing new credit cards. This was because of issues with the bank’s information technology.

“We have been adding roughly 150 branches every year. This year, the momentum will continue,” said Virat Diwanji, group president and head of consumer banking at Kotak, in an email interview with Reuters on Monday. Kotak, India’s fourth-largest private bank, will focus on areas where deposits are easily available. According to Diwanji, customer acquisition through branches is doing well.

Before the RBI’s order, Kotak heavily relied on digital channels for new clients. In the October-December quarter, 95% of its new personal loans and 99% of new credit cards were issued digitally. Data for the January-March quarter is not yet available.

Adding new branches may not help Kotak get new customers immediately, but it will increase its presence in the medium to long term, said Kranthi Baithini, director of equity strategy at WealthMills Securities. However, this strategy will come with high costs, he added.

The bank is working hard to meet the RBI’s requirements and return to normal operations, Diwanji said. Kotak is investing more in its IT systems, including improving digital payment security and meeting regulatory standards for data and cybersecurity.

In the last 12-15 months, Kotak has hired over 530 employees, mostly from tech backgrounds. The bank will continue to focus on personal and business loans, Diwanji said.

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