PBL-CFM Synopsis On

Banking & Finance Industry

Kotak Mahindra Bank Ltd.

Submitted by :

Divyanshu Joshi,
Akshit Goyal,
Dhananjay Bure
Sec-D, Group-13

INTRODUCTION
Kotak Mahindra Bank is the flagship company of the Kotak Group. It is one of the fastest-
growing banks and the most admired financial institution in India. The Bank offers transaction
banking, operates lending verticals, manages IPOs, and provides working capital loans. It was
incorporated in the year 1985 under the name Kotak Capital Management Finance Limited. On
April 8 1986 the company's name was changed to Kotak Mahindra Finance Ltd. They started
with a bill discounting activity. In February 2003 the company was given the license to carry on
banking business by the Reserve Bank of India (RBI). This approval created banking history
since Kotak Mahindra Finance Ltd is the first non-banking finance company in India to convert
into a bank such as Kotak Mahindra Bank Ltd.

IMPACT OF BANKING ON ECONOMY

Banking plays a significant role in the development of the economy of India. It is the backbone
of any country’s economy, and its well functioning is essential for nation-building. The banking
system of a country performs functions like:

● Advancement of Credit
● Business Development
● Financial Security
● Cash Management
● Financial stability

HOW DOES KOTAK CONTRIBUTE TO THE ECONOMY?

Kotak makes money by providing and earning interest from loans such as mortgages, auto loans,
business loans, and personal loans.

Kotak bank makes money in the following ways:

● Interest Income:
● Capital Markets Income
● Fee-Based Income

As per recent results, the net profit of Kotak Bank for FY22 increased to ₹8,573 crores from
₹6,965 crores in FY21 up 23%. In Q4, the lender's net interest income (NII) increased to ₹4,521
crores, from ₹3,843 crores in Q4FY21, up 18%. Net Interest Margin (NIM) was 4.78 % for
Q4FY22. Fees and services for Q4FY22 were ₹1,697 crores, up 23% YoY.

PROBLEM FACED BY KOTAK BANK

1. NON-PERFORMING ASSETS: The banks at present do not have any machinery to ensure
that their loans and advances are going into productive use in the larger public interest. NPA’S
nowadays is becoming a major problem for banks. Due to a high proportion of non-performing
assets or outstanding due to banks from borrowers they are incurring huge losses.

2. COMPETITION FROM NON-BANKING FINANCIAL INSTITUTIONS: As far as

deposit mobilization is concerned, commercial banks have been facing stiff challenges from non-
banking financial intermediaries such as mutual funds, housing finance corporations, leasing, and
investment companies. All these institutions compete closely with commercial banks in
attracting public deposits and offer higher rates of interest than are paid by commercial banks.

WHY KOTAK MAHINDRA BANK?

We selected Kotak as it is one of the fastest-growing banks in India and 3rd largest bank in India,
having about 30 to 50% year-on-year growth. It was founded by Uday Kotak, the most
successful banker in India. Brand Finance Banking 500 published in February 2014 in Banker
magazine, rating Kotak bank an AA+ rating and 245th ranking from 500 top banks selected in
the study.

Kotak Mahindra got its banking license in the year 2003 and was the first Private Bank in India.
Next was Yes Bank, the former succeeded with about 30-50% YOY returns while later collapsed
due to its unethical and sub-par management in the company. We are keen to study how the
management of Kotak is responsible for its growth, and the Strategies they resorted to, in the
time of crisis (2008 housing market downfall, 2020 COVID-19 Pandemic).

Furthermore, we are interested in Kotak AMC as it manages Mutual Funds and that adds value to
our Major in PGDM i.e. Finance.

RESOURCES:

https://en.wikipedia.org/wiki/Kotak_Mahindra_Bank
https://www.kotak.com/en/home.html
https://www.business-standard.com/company/kotak-mah-bank-2330/information/
company-history