Kotak Mahindra Bank Sees Some Signs Of Stress In Microfinance, Credit Card Sectors
Kotak Mahindra Bank Ltd.'s Chief Executive Officer Ashok Vaswani said that the lender is seeing some signs of stress in the credit cards segment with delinquencies.
The concerns were particularly visible in lower-ticket items, people who are new-to-credit and over-leveraged customers, Vaswani said in a media call after the results announcement on Saturday.
"...I think a bunch of customers who were actually behaving very, very well but looks like they got a lot more additional credit and now over leverage. And those are the customers that are showing some signs of stress," Vaswani told reporters.
The bank is, however, working with teams and customers in order to try and get them back in good financial health, he added.
The private lender's standalone net profit rose 81% year-on-year to Rs 6,249 crore in April-June period. Net interest income, or core income, rose 9.7% year-on-year to Rs 6,843 crore. However, provisions for the quarter rose 58.7% year-on-year to Rs 578.4 crore.
The lender witnessed increased provisioning for credit cards and personal loans, particularly low-ticket loans, due to emerging signs of delinquencies in some states, Kotak Mahindra Bank's Group Chief Financial Officer Devang Gheewalla said in a media call.
Gheewalla further clarified that while the bank is taking action, the business is in sound position.
Kotak Mahindra Bank had completed the acquisition of Sonata Microfinance in the previous financial year, Gheewalla said, adding that the bank had tightened disbursement and credit norms to protect things.
The statement from the lender comes after the Reserve Bank of India barred Kotak Mahindra Bank in April from issuing fresh credit cards and onboarding of new customers through its online and mobile banking channels.
Vaswani said that the lender has submitted some timelines to the regulator about the process, adding that the bank has made significant progress on the tech side and also deployed resources from Accenture, Oracle and Infosys to work towards coming out of these curbs.
