Kotak Mahindra Bank Plans Separate Vertical For Mid-Market Cos, Serve From 15 Locations; Check Details

Kotak Mahindra Bank is set to create a separate vertical for mid-market companies having turnover between Rs 500-1,500 crore to up its focus on the segment.

The private sector lender is also keen to increase its focus on high-margin structured finance, news agency PTI quoted a top bank official as saying.

At present the mid-market segment is part of the large corporate team, which covers companies between Rs 500-6,000 crore.

From April 1, 2023 onwards, the new vertical will be created while the large corporate team will serve clients having revenues between Rs 1,500-6,000 crore.

“Our large corporate growth is relatively benign compared to SME (under Rs 500 crore revenue companies) growth, and that is one of the reasons for this change. Mid-market opportunity is large and we believe we are under penetrated in this segment,” Paritosh Kashyap, president and head of wholesale banking, told PTI,

The private sector lender will serve the mid-market opportunity from about 15 dedicated locations, Kashyap said, adding that the small and medium enterprises (SME) segment is served from 50 locations and the number is much smaller for large corporations.

Kashyap said the bank used to have a mid-market team about four years ago, and added that the latest reorganization is driven by the need to get more focus on the segment and grow it faster than what it would have grown under the older way of organizing the business.

It is putting together a team largely drawn from internal employees already catering to this business and transferring them into the newly created mid-market vertical, Kashyap said, adding that some talent will also be hired from outside.

The bank is also upping its focus on the structured finance offerings, whose contribution in the overall wholesale book is in low single-digits at present and growing the same, Kashyap said.

“Typically these are non standard financing requirements with relatively better collaterals and higher margins. As of now our exposure is in the low single-digits. We want to grow this book,” he said.

Kotak Mahindra Bank is not staying off from any sector, Kashyap said, adding that the problem segments of the past like non-bank lenders, infrastructure companies and real estate players are in better shape now.

Kashyap is confident of higher credit growth in FY24 on an array of factors, and pointed out that the government’s Rs 10 lakh crore capital expenditure commitment will also help the credit growth.

At present 30% of the bank’s wholesale book is linked to external benchmarks, Kashyap said, adding that competition in the large ticket loan segment is a reality which influences pricing as well.

Recently, the bank announced that it has opened 100 gold loan branches in the current financial year, so far. As of March 31, 2022, the bank was offering gold loans through its 400 branches.

With the addition of new gold loan branches in this FY, Kotak Mahindra Bank now offers gold loans through its 500 branches spread over 253 cities across the country.

The bank plans to open 50 more gold loan branches in this financial year ending March 31, 2023.

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