New Delhi

India's Kotak Mahindra Bank is eying offline expansion months after the Reserve Bank of India barred the private lender from digital customer sourcing. The Bank is looking to add about 175 to 200 branches in the Financial year 2024-25.

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In April, the RBI stopped Kotak from adding new customers via its digital channels. This decision aimed to scrutinise Kotak for the deficiencies in the Bank's tech system in 2022 & 2023. 

Kotak's expansion also aims to address growing customer concerns over money safety in their respective accounts and credit card functionalities. 

Virat Diwanji, group president and head of consumer bank, told Reuters, 'We have been adding roughly 150 odd branches for several years. This year, too, the momentum is going to continue.' The official added that the country's fourth-largest private lender will target pockets where there is easy availability of deposits and added that customer acquisition through branches is seeing good traction.

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On RBI's order, Diwanji said that the Bank is working 'steadfastly' to fulfil RBI's requirement and return to business 'as usual.' The Bank has reportedly stepped up investments to strengthen its Tech systems, including steps to improve its digital payment security controls. Kotak has hired over 530 employees in the last 12-15 months, most of whom are from tech backgrounds, he added.

Before the RBI order, Kotak relied heavily on digital channels to source new clients. About 95 per cent of its new personal loans were disbursed digitally in the October-December quarter. Over 99 per cent of new credit cards were also issued digitally. 

Kranthi Baithini, director of equity strategy at WealthMills Securities, told Reuters, 'Kotak's branch addition plans may not immediately help source new customers, but the strategy may play out in the medium-to-longer as it will increase its presence and reach.' He added that it will come with high overhead costs.