Kotak Mahindra Gets Quick Yes From RBI To Acquire Sonata Finance
Kotak Mahindra Bank was hoping to get a green light from the Reserve Bank of India (RBI) for buying Sonata Finance by the end of this financial year, FY24. Good news, they got it sooner!
On October 19, the RBI said yes, and they made it public on October 20. Kotak bought Sonata Finance for a whopping ₹537 crore, all in one go.
So why did Kotak want Sonata? Well, Sonata had a lot going for it. It had 450 branches and nearly 3,000 employees. Sonata had some bad loans but not too bad. Their gross non-performing assets were 2.27%, and the net NPAs were 0.68%.
Kotak is doing pretty well in the microfinance sector. They’ve seen a lot of people asking for loans in three main areas: stuff related to farming, small businesses, and small-scale trade. So, getting Sonata will help Kotak grow even more, especially in the northern parts of India.
What happens to Sonata after all this? Well, it’s gonna be a fully-owned part of Kotak Mahindra Bank. Basically, Sonata will help Kotak serve more people and offer more products.
As for other details, Kotak Mahindra is announcing its performance for the last quarter (Q2) on October 21. If you don’t remember, let me remind you that it’s going to be a sequel to Kotak.
Do you remember, Kotak bought BSS Microfinance back in 2016 for ₹139 crore? That move helped them a lot in the southern states. So, buying Sonata is like a sequel but for the northern regions of the country.