The Indian personal loan division of Standard Chartered Bank has been acquired by Kotak Mahindra Bank. Standard Chartered is able to concentrate on providing wealth and investment banking services in the nation because of this calculated approach.
The outstanding amount in Standard Chartered’s personal loan book in India as of September 30 was Rs 4,100 crore ($488 million). Due to rising customer demand, the personal loan business in India has grown extremely competitive. The central bank has mandated lenders to set aside additional capital for personal loans to address worries about rising risk.
This has caused banks’ outstanding personal loan balances to moderate, falling from 18.3% to around 17% on-year in August of last year. “Ambuj Chandna, head-products, consumer bank at Kotak Mahindra Bank, stated that Kotak has a lot of room to grow in the higher-end segment of the Indian unsecured lending market.” According to Reserve Bank of India (RBI) rules, the proposed transaction contains standard loans, which are loans that are currently operating well with no indicators of distress or default.
According to Kotak Mahindra Bank, subject to regulatory clearances and other closing requirements, the deal is expected to be completed within the next three months. Its objective is to use its technology know-how and commitment to providing excellent customer service to make the transfer process easier for current Standard Chartered Bank clients who hold personal loans.
“We decided to sell the personal loan book because we want to focus on growing the wealth, affluent, and SME (small and medium enterprises) segments of the bank,” said Aditya Mandloi, head of wealth and retail banking for Standard Chartered Bank in India and South Asia. According to Mandloi, India is a crucial market for StanChart’s network, and the lender intends to persist in its investments and expansion efforts within the nation.
On Saturday, October 19, Kotak Mahindra Bank Ltd. is scheduled to report its quarterly financial results covering the July-September period. For the September quarter, analysts predict a muted increase in net interest income (NII) and net profit. The forecast for NII is between Rs 6,850 and Rs 7,150 crore, which represents a 10-12% yearly rise but stays unchanged from the previous quarter.
It is anticipated that standalone net profit will increase YoY by more than 10% to reach between Rs 3,375 and Rs 3,560 crore. Nonetheless, this amount is notably less than the net profit of Rs 6,250 crore from the preceding quarter. Experts predict that the bank’s bottom line will be impacted by decreased other revenue and increased operational expenditures.
