According to managing director and CEO Ashok Vaswani, the regulatory action against Kotak Mahindra Bank’s digital banking division is expected to have a 300–450 crore impact on the bank’s profit-before-tax (PBT) in FY25. This was said during a post-earnings analyst conference call.
Vaswani emphasized that the Reserve Bank of India’s (RBI) financial impact on the private lender’s company is’minimum’ because the RBI has only prohibited new customer onboarding.
“We remain fully focused to mitigate the current challenges imposed on Kotak Mahindra Bank’s digital lending business. Our focus for this fiscal year will be to deepen existing customer relations through cross-selling instead of new acquisitions,” he stated.
Brokerages, seeing it as structurally detrimental to their entire operations, also became cautious and lowered target prices.
With a background in technology, Vashwani clarified that the financial impact is expected to be minimal because, during the first year of onboarding new customers, acquisition costs outweigh revenue.
“For Kotak 811 and new credit card issuances, the cost of acquisition is usually higher than revenue in the first year of customer onboarding. The amount of technology spends involved here is higher as well, so we need to re-prioritise that,” Vaswani said.
Disclaimer: Please consult with licensed professionals before making any financial decisions.
