Kotak Mahindra Bank is more worried about the “reputational impact’’ of the action taken by the Reserve Bank of India (RBI) even as it plans to focus on cross-selling and deepening relationship with existing customers.
The private sector lender also believes that the curbs will have “relatively small’’ financial impact.
Speaking to reporters after the lender reported results for the quarter and year ended March 31, Ashok Vaswani, MD & CEO, Kotak Mahindra Bank, said the bank is now accelerating efforts and investments to win back the trust of customers and the regulator.
During the March quarter, the bank posted a net profit of ₹4,133 crore, a gain of 18 per cent from ₹3,496 crore in the same period of the previous year.
Core net interest income (NII-interest earned minus interest paid) increased to ₹6,909 crore from ₹6,103 crore in the year-ago period, up 13 per cent. The bank had five crore customers as on March 31, 2024, up from 4.1 per cent in the corresponding previous period.
On April 24, the central bank had barred the bank from onboarding new customers through its online and mobile banking channels and also from issuing fresh credit cards with immediate effect. The RBI took the action after the lender did not address the concerns expressed by the RBI on its IT systems and its IT risk and information security governance was found to be inadequate.
Admitting that its efforts had fallen short of the regulator’s expectations, Vaswani on Saturday said Kotak Mahindra Bank is in continuous dialogue with the RBI to reach the expected outcome.
While the bank has maintained that the restrictions will not have a material impact on its financials, the top management did not quantify the level at the press conference. However, at an analyst meet the bank indicated that the impact of the RBI action is estimated to be ₹300-450 crore on the profit before tax (PBT) level on an annualised basis.
In a presentation to analysts, the lender said it will step-up investments to fortify its IT systems and the focus is on accelerating execution of the comprehensive plan for core banking resilience. Vaswani said the bank will redouble efforts on the technology front.
