Kotak Mahindra Bank set for growth as RBI lifts restrictions

The Indian bank is allowed to onboard new customers and issue new credit cards.

Kotak Mahindra Bank is positioned for growth over the next 24 months after India lifted restrictions on onboarding new customers or issuing fresh credit cards.

On 12 February 2025, the Reserve Bank of India (RBI) announced that it had removed supervisory restrictions on Kotak Mahindra Bank.

Since 24 April 2024, Kotak Mahindra Bank was ordered to cease and desist from onboarding new customers through its online and mobile banking channels, as well as issuing fresh credit cards.

The resumption of new credit cards issuances will likely improve margins for Kotak Mahindra Bank, according to S&P Global Ratings.

The bank’s credit card portfolio contracted by approximately 3% in the nine months ended 31 December 2024, compared with a 44% growth in fiscal 2024 that ended 31 March2024) as the bank directed focus toward lower-yielding secured products amidst the restrictions.

Kotak Mahindra Bank is expected to maintain strong capitalization, as well as maintain prudent underwriting standards whilst pursuing growth, S&P said.

“We forecast Kotak Mahindra Bank's pre-diversification risk adjusted capital ratio (RAC) will remain above 10%--our threshold for a strong capital assessment--even as the bank ramps up growth. The bank's RAC ratio was 13.9% as of March 31, 2024,” the ratings agency wrote.

“We expect Kotak Mahindra Bank to maintain its strong capitalization and good risk management over the next two years,” it added.