RBI ban big setback to Kotak Bank

New Delhi: S&P Global Ratings on Friday said RBI’s regulatory action on Kotak Mahindra Bank could restrain the lender’s credit growth and profitability.

The RBI on Wednesday barred Kotak Mahindra Bank from issuing fresh credit cards and onboarding new customers online. Credit cards are a higher-yielding target growth segment for Kotak Mahindra Bank. This portfolio grew at 52 per cent year-on-year as of December 31, 2023, compared with total loan growth of 19 per cent, the US-based rating agency said.

“Action by the Reserve Bank of India (RBI) this week could push the bank to rely more on physical branch network expansion to supplement growth thus entailing higher operating costs,” S&P said, adding that it could be a setback for credit growth and profitability.

This action will not, however, materially affect our ratings on Kotak Mahindra Bank (BBB-/Stable/A-3).