The shares of the banking and financial services provider fell up to 12 percent after RBI barred the company from onboarding new customers online and Issuing Credit Cards.
With a market capitalization of Rs 3.31 lakh crore, the shares of Kotak Mahindra Bank Ltd were traded at Rs 1,669.40 per share, decreasing around 10 percent as compared to the previous closing of Rs 1,843.05 apiece.
According to the company filing, The Reserve Bank of India (“RBI”) has issued an order requiring Kotak Mahindra Bank Ltd to immediately halt and desist from onboarding new clients through the Bank’s online and mobile banking channels, as well as issuing new credit cards.
The RBI imposed business restrictions on Kotak Mahindra Bank to protect customer interests and financial stability. These restrictions will continue until the completion external audit which is approved by the RBI. The audit will address RBI inspections’ findings and ensure the remediation of identified deficiencies.
Furthermore, the bank promises its existing clients that their credit card, mobile, and online banking services will continue uninterrupted. The Bank’s branches will continue to welcome new clients, offering them all of the bank’s services except the issuing of new credit cards.
Kotak Mahindra Bank is increasingly leveraging digital channels, with a significant portion of new personal loans and credit cards processed digitally. In Q3FY24, the bank saw substantial growth in its credit card portfolio, recording a 52% YoY and 10% QoQ increase.
The bank’s credit card book accounts for ₹13,882 crore, or 3.9% of total loans, indicating a considerable reliance on digital platforms for company growth.
Looking into Kotak Mahindra Bank’s financial performance, revenue increased by 31 percent from Rs 11,011 crore in Q3 FY23 to Rs 14,495 crore in Q3 FY24. During the same period, net profit increased by 7 percent, from Rs 3,995 crore to Rs 4,265 crore.
Kotak Mahindra Bank is a diversified financial services group that offers a wide range of banking and financial services such as retail banking, treasury and corporate banking, investment banking, stock broking, vehicle financing, advisory services, asset management, life insurance, and general insurance.
Written by:- Abhishek Singh
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