MACROECONOMIC ENVIRONMENT
FY 2024-25 started on a positive note as growth prospects remained robust despite the ongoing geopolitical upheavals. Inflation, which had remained stubbornly high in Calendar Year ("CY") 2023, was showing signs of easing in CY 2024. Consequently, major central banks began their easing cycle after holding interest rates at decadal-high levels. The US election outcome in November 2024 and subsequent assuming office of the President in January 2025 have, however, led to high uncertainty, putting breaks on the pace of global growth momentum. The US administration?s trade and tariff policies have given rise to fears of higher inflation, slower global growth and a repricing in the pace of monetary easing. A trade war between the US and China would likely hurt growth prospects as the world enters a new phase of trade negotiations, investment reconsiderations and rerouting of trade and supply chains. According to the International Monetary Fund (IMF), global real GDP growth in CY 2025 is estimated at 2.8% compared to its January 2025 projection of 3.3% and CY 2024 growth at 3.3%.
Domestically, growth concerns have remained on the forefront in FY 2024-25, beginning with weak government spending in Q1FY25 due to the general elections. Q1FY25 real GDP growth was at 6.5% (decelerating from 8.4% in Q4FY24). Private consumption growth of 8.3% continued to outpace investments (which improved to 6.7% from 6.0% in Q4FY24) after an otherwise lacklustre performance in FY 2023-24. Real Gross Value Added (GVA) growth fell to 6.5% (from 7.3% in Q4FY24), largely supported by industry sector growth at 8.5%. In Q2FY25, real GDP growth slowed to 5.6%, led by weak government consumption growth, along with lacklustre growth in private consumption and investments. Real GVA growth moderated to 5.8% due to poor corporate earnings. In Q3FY25, real GDP growth picked up to 6.4%, as growth in government spending normalised to 9.3% after two quarters of slowdown. GVA growth was led by services growth at 7.4%. In Q4FY25, real GDP surprised on the upside at 7.4%, driven by investment growth of 9.4%. Real GVA growth also quickened to 6.8%, driven by the construction sector. Notably, the wide divergence between real GDP-GVA growth rates witnessed in FY 2023-24 due to high growth in net indirect taxes (indirect taxes-subsidies) disappeared in FY 2024-25.
The National Statistics Office (NSO) estimates real GDP growth in FY 2024-25 at 6.5% (in line with the NSO?s second advance estimate), sharply down from 9.2% in FY 2023-24. On a value-added basis, real GVA growth is estimated at 6.4% in FY 2024-25 (lower than the 8.6% in FY 2023-24), led by services growth at 7.2% (mainly public admin, defence and others).
The FY 2026 Union Budget continued its focus on fiscal consolidation. Both capital and revenue expenditure growth rates were muted, with an 11% growth budgeted for revenue receipts on the back of a 10.1% growth in nominal GDP. The government announced changes in personal income tax slabs/rates to provide a boost to private consumption, translating to _ 1 trillion of tax revenue foregone. Growth in capital expenditure was muted overall, driven by defence and housing. Growth in revenue expenditure has also remained under control. The government continues to prioritise fiscal consolidation and rationalised expenditure to improve the quality of the fiscal. It has targeted central GFD/GDP at 4.4% in FY2026BE (compared to 4.8% in FY2025RE). The strong focus on consolidation was further visible in (1) no growth in subsidies, (2) a modest 8% YoY increase in the rural social sector schemes and (3) no increase in capex in railways and roads. The central government has targeted an 11% growth in tax revenues and total expenditure growth of 7%. The divestment target has been pegged at _ 470 billion.
DOMESTIC PRICE DYNAMICS
FY 2024-25 saw a decent progress in headline CPI disinflation. Average headlineCPIinflationinFY2024-25fellto4.6%from5.4%inFY2023-24, with a MarcRs. 2025 inflation print of 3.3%, the lowest since August 2019. Even as inflation has decelerated, the drivers shifted through the year, with food inflation trending lower (with the exception of Q3FY25) and core inflation (CPI excluding food, beverages and fuel) inching up. Food inflation decelerated due to a normal monsoon season and food prices fell across the board. Core inflation was led by a rise in gold prices, with MCX gold prices surging 30% in FY 2025. The average headline inflation trended lower in RS.1FY25 at 4.6% YoY compared to 5.7% in RS.2FY24. Q3FY25 saw the re-emergence of food price inflation, led largely by vegetables and oils and fats. This trend reversed again, with food inflation normalising to 4.1% average in Q4FY25, bringing overall inflation down to 3.7% for the period. Core inflation averaged 3.5% in FY 2024-25, while food inflation was at 7.3%. In addition, crude oil prices were lower by 14.6% in FY 2024-25 from the previous year.
MONETARY POLICY AND INTEREST RATES
On the monetary policy front, after remaining on a prolonged pause of two years, the RBI initiated its repo rate cutting cycle in the last Monetary Policy Committee meeting of FY 2024-25, with a 25-bps cut, bringing the repo rate to 6.25%. With inflation below the RBI?s 4% target, no immediate concerns around inflation and growth slowdown concerns coming to the forefront, the MPC unanimously voted for the rate cut. The policy stance of "withdrawal of accommodation" was unchanged through FY 2024-25.
Banking system liquidity, after starting in a brief positive zone, slipped into the deficit zone before again turning to the surplus zone from July 2024. While system liquidity continued to remain in surplus until mid-December 2024, the conditions were tightening amid advance tax and GST collections and expected FX intervention to manage the losses in INR. In December 2024, the RBI reduced the CRR by 50 bps to 4.00%. The RBI also undertook more durable and frictional liquidity measures, including conducting OMO purchases, FX buy/sell swaps and Daily VRRs, to ensure adequate and smooth monetary transmission.
Consequently, the overnight money market rates stayed around the upper end of the LAF corridor in Q1FY25 during the period of system liquidity deficit. Subsequently, the average overnight rates for the following two quarters were closer to the repo rate before tight liquidity conditions again pushed the rates higher. The RBI?s proactive liquidity easing measures since January 2025 have brought the overnight rates lower than the repo rate.
The Indian bond market continued to track cues, mainly from US treasury yields, crude oil prices and the domestic inflation trajectory. With inflation trending downwards, markets were awaiting the beginning of the rate-cut cycle by major central banks. Consequently, after remaining more or less stable through Q1FY25, US Treasury yields softened in Q2FY25 in anticipation of the first interest rate cut by the Fed, supported by easing inflation in the US. The Indian 10-year benchmark yield fell through the period, touching lows of 6.94% in June 2024. In Q2FY25, the 10-year benchmark yield eased further to touch lows of 6.75% in September, aided by a sharp drop in oil prices, closing below USD 70/bbl for the first time in FY 2024-25. Adverse domestic inflation prints in Q3FY25 and strong labour data in the US kept domestic yields comparatively elevated, with the 10-year benchmark yield touching a high of 6.89% in November. Following this, however, proactive liquidity easing measures announced by the RBI, domestic yields continued to soften, reaching lows of 6.65% in December. The Trump administration?s announcements and related uncertainty, as well as a prolonged pause by the Fed due to strong economic activity data, hit investor sentiment, leading to massive sell-off in treasuries around the beginning of CY 2025. The UST 10-year yield rose to 4.8% in January from local minimum of 4.5%. As a result, the Indian 10-year benchmark rose to 6.88% in January 2025 from 6.65%. Since then, bond markets have remained supported by favourable inflation prints below the RBI?s 4% target, creating room for policy rate cuts, aggressive liquidity easing measures, as well as softening crude oil prices due to the weakening global growth outlook. Further aiding bond market sentiments was the significantly lower-than-expected gross borrowing number of _ 14.8 trillion (as well as a lower-than-expected GFD/GDP ratio at 4.4%) in the FY 2025-26 Union Budget. Consequently, the 10-year benchmark yield ended FY 2024-25 at 6.58% (48 bps lower than the previous year?s closing).
EXTERNAL SECTOR DYNAMICS AND THE USD/INR
The external sector in FY 2024-25 came under pressure initially from a widening of the goods trade deficit (mainly due to a sequential contraction in exports). Current account deficit in Q1FY25 amounted to 0.9% of GDP as the goods trade deficit expanded and services trade surplus declined as compared to Q4FY24. While FPI flows were near neutral, strong FDI inflows supported the capital account surplus. The outlook improved in Q2FY25, as the widening in trade deficit was more than compensated by FPI inflows, both in equity and debt and higher inflows under banking capital. While the current account deficit widened to USD 17 billion in Q2FY25, capital account surplus rose to USD 36 billion, bringing the overall balance of payment surplus to USD 19 billion. However, the external sector performance in Q3FY25 deteriorated significantly, as a risk-off sentiment globally led to heavy FPI outflows to the tune of USD 11 billion, further worsened by net FDI outflows of USD 3 billion. The current account deficit improved on the contrary, as services trade surplus expanded and the goods trade deficit lowered as compared to the previous quarter. Falling crude oil prices also provided tailwinds to the external sector position. In Q4FY25, current account balance improved to a surplus of USD 13 billion led by narrowing of goods trade deficit and robust invisibles surplus. Overall, in FY 2024-25, the BOP registered a deficit of USD 5.0 billion, with current account deficit at 0.6% of GDP (from 0.7% deficit in FY 2023-24) and capital account surplus of USD 17 billion (from USD 89 billion in FY 2022-23). Notably, the rise in services surplus has helped narrow the current account deficit despite the widening of the goods trade deficit.
On the FX front, the INR has broadly retained its depreciation bias (2.5% fall in FY 2024-25 from the previous year) with most of the depreciation occurring in RS.2FY25. USD-INR moved mostly sideways in RS.1FY25 as the RBI?s regular FX intervention kept the currency pair range-bound. In Q2FY25, healthy FPI inflows, along with a weakening DXY index, provided strength to the rupee. The rupee came under pressure in Q3FY25, as FPI outflows accelerated and the dollar started gaining strength on the back of a pickup of the US exceptionalism and delayed rate cuts theme after US President Trump?s election in Q3FY25. During this period, USD-INR traded in a range of 83.8 to 85.2. The DXY index extended the gains on continued hopes of US outperformance, with the index surging to a tad above 110 levels in January 2025. However, following the peak, the Trump administration?s trade and tariff policies, along with EUR strength due to the German fiscal expansion plans, led to continued weakness in the DXY index, which closed the year ~103 (compared to 104.5 levels by MarcRs. 2024 end). Simultaneously, USD-INR reached a high of 87.95 in February amid heightened uncertainty and minimal RBI FX intervention. Overall, the INR traded in a range of _ 82.95-87.95 in FY 2024-25, with the RBI managing the volatility by intervening on both sides opportunistically. The FX reserves in FY 2024-25 increased by USD 79.4 billion.
CONSOLIDATED FINANCIAL PERFORMANCE
The Bank, along with its subsidiaries (the Group), offers a comprehensive range of financial products and services to its customers. The key businesses are Commercial Banking, Investment Banking, Stock Broking, Vehicle Finance, Advisory Services, Asset Management and Life Insurance.
The financial results of the subsidiaries and associates used for the preparation of the consolidated financial results are in accordance with Generally Accepted Accounting Principles in India (‘GAAP?) specified under Section 133 and relevant provisions of the Companies Act, 2013.
During the year, domestic rating of fixed deposits and long-term instruments issued by the Bank and the major entities in the Group continued to be rated "AAA".
ENTITY-WISE CAPITAL AND RESERVES OF THE GROUP
| Particulars | 31st March, 2025 | 31st March, 2024 |
| Kotak Mahindra Bank Limited | 117,145.62 | 96,639.46 |
| Kotak Mahindra Prime Limited | 10,195.53 | 9,176.48 |
| Kotak Mahindra Investments Limited | 3,841.65 | 3,329.02 |
| Kotak Infrastructure Debt Fund Limited | 572.62 | 519.61 |
| BSS Microfinance Limited | 936.32 | 1,009.85 |
| Sonata Finance Private Limited | 402.07 | 389.41 |
| Kotak Securities Limited | 10,012.04 | 8,286.15 |
| Kotak Mahindra Capital Company Limited | 1,630.20 | 1,181.03 |
| Kotak Mahindra Life Insurance Limited | 6,403.07 | 5,863.23 |
| Zurich Kotak General Insurance Company (India) Limited | - | 447.12 |
| Kotak Mahindra Asset Management Company Limited and Kotak Mahindra Trustee Company Limited | 3,705.35 | 2,520.94 |
| Kotak Alternate Assets Managers Limited# | 1,187.44 | 864.58 |
| International Subsidiaries | 2,280.82 | 1,962.36 |
| Other Entities | 106.94 | 94.09 |
| Total | 158,419.67 | 132,283.33 |
| Add: Share in Associates | 1,767.59 | 1,587.34 |
| Less: Consolidated Adjustments | (2,792.18) | (3,978.27) |
| Consolidated Capital and Reserves | 157,395.08 | 129,892.40 |
#Formerly known as Kotak Investment Advisors Limited
On 18th June, 2024, the Bank completed the divestment of 70% stake (through a combination of fresh growth capital and share sale) in its subsidiary Kotak Mahindra General Insurance Company Limited ("KGI") to Zurich Insurance Company Limited ("Zurich"). Consequent to this sale, KGI ceased to be a subsidiary of the Bank and became an Associate with effect from 18th June, 2024. The Bank continues to hold the remaining 30% of the share capital of Zurich Kotak General Insurance Company (India) Limited (formerly known as Kotak Mahindra General Insurance Company Limited) as at 31st March, 2025.
CONSOLIDATED PERFORMANCE
| Particulars | FY 2024-25 | FY 2023-24 |
| Total Income | 106,902.24 | 94,273.91 |
| Consolidated Profit After Tax | 22,125.99 | 18,213.21 |
| Consolidated Capital and Reserves | 157,395.08 | 129,892.40 |
| Key Ratios | ||
| Return on Average Assets (RoAA) % | 2.73% | 2.66% |
| Return on Average Equity % | 15.19% | 15.08% |
| Earnings per equity share (diluted) (_) | 111.29 | 91.45 |
| Book-value per equity share (_) | 791.64 | 653.41 |
| Net Interest Margin (NIM) % | 4.97% | 5.31% |
| Gross NPA % | 1.45% | 1.38% |
| Net NPA % | 0.36% | 0.36% |
| Consolidated Capital Adequacy Ratio (CAR) %* | 23.31% | 21.82% |
| CET I* | 22.34% | 20.72% |
*As per Basel III norms issued by the RBI
The financial results of subsidiaries are explained later in this discussion. A snapshot of the entity-wise Profit before Tax (PBT) and Profit after Tax (PAT) is as follows:
CONSOLIDATED FINANCIAL RESULTS (_ in crore)
| FY 2024-25 | FY 2023-24 | |||
| Particulars | PBT | PAT | PBT | PAT |
| Kotak Mahindra Bank Limited | 21,584.11 | 16,450.08* | 18,013.72 | 13,781.58 |
| Kotak Mahindra Prime Limited | 1,356.86 | 1,015.47 | 1,188.36 | 888.06 |
| Kotak Mahindra Investments Limited | 674.51 | 501.25 | 690.51 | 514.21 |
| Kotak Infrastructure Debt Fund Limited | 52.91 | 53.20 | 43.40 | 43.40 |
| BSS Microfinance Limited | (99.34) | (73.67) | 509.04 | 383.22 |
| Sonata Finance Private Limited@ | 17.27 | 12.66 | (16.64) | (13.71) |
| Kotak Securities Limited | 2,175.23 | 1,640.46 | 1,635.18 | 1,226.17 |
| Kotak Mahindra Capital Company Limited | 460.53 | 360.63 | 276.69 | 215.01 |
| Kotak Mahindra Life Insurance Limited | 1,174.99 | 769.47 | 1,041.24 | 688.62 |
| Zurich Kotak General Insurance Company (India) Limited^ | (20.56) | (20.56) | (88.95) | (88.95) |
| Kotak Mahindra Asset Management Company Limited and Kotak Mahindra Trustee Company Limited | 1,270.40 | 976.50 | 705.84 | 525.18 |
| Kotak Alternate Assets Managers Limited# | 179.65 | 139.31 | 76.87 | 58.84 |
| International Subsidiaries | 294.46 | 254.98 | 219.74 | 188.72 |
| Others | 10.09 | 8.02 | 7.91 | 5.99 |
| Total | 29,131.11 | 22,087.80 | 24,302.91 | 18,416.34 |
| Add: Share from Associates | 180.25 | 236.38 | ||
| Less: Inter-company and Other Adjustments | (142.06) | (439.51) | ||
| Consolidated PAT | 22,125.99* | 18,213.21 |
^On 18th June, 2024, the Bank completed the divestment of stake in its subsidiary Kotak Mahindra General Insurance Company Limited ("KGI") to Zurich Insurance Company Limited ("Zurich"). Consequent to this sale, KGI ceased to be a subsidiary of the Bank and became an Associate with effect from 18th June, 2024. *Includes gain on divestment of KGI amounting to _ 2,729.95 crore on a standalone basis and _ 3,013.46 crore on a consolidated basis
@ Acquired on 28th March, 2024
#Formerly known as Kotak Investment Advisors Limited
CONTRIBUTION OF THE ASSOCIATES TO THE GROUP FOR FY _ _y-_6
(_ in crore)
| Name of the Company | Investment by Kotak Group | % Shareholding of the Group | Contribution to Profit | Contribution to Capital and Reserves |
| Infina Finance Private Limited | 1.10 | 49.99% | 93.80 | 1,318.64 |
| Phoenix ARC Private Limited | 100.02 | 49.90% | 91.72 | 454.23 |
| Zurich Kotak General Insurance Company (India) Limited | 321.82 | 30.00% | (5.27) | (5.27) |
ASSETS UNDER MANAGEMENT (AUM) ACROSS THE GROUP
Assets under Management (AUM), including undrawn commitments, as on 31st March, 2025 were _ 669,885 crore (_ 560,140 crore as on 31st March, 2024), comprising assets managed and advised by the Group.
The Group has a wide distribution network of branches and franchisees across India, an International Business Unit at Gujarat International Finance Tec-City (GIFT), overseas branch at the Dubai International Financial Centre (DIFC) and international offices in London, New York, Dubai, Abu Dhabi, Mauritius and Singapore.
BANK AND ITS SUBSIDIARIES: FINANCIAL AND OPERATING PERFORMANCE
BANK HIGHLIGHTS
Kotak Mahindra Bank Limited ("Bank") is the flagship company of the Kotak Group. The principal business activities of the Bank are organised into Consumer Banking, Commercial Banking, Wholesale Banking, Treasury, Private Banking and resolution of acquired stressed assets. The Consumer, Commercial and Wholesale Banking businesses correspond to the key customer segments of the Bank. The Treasury offers specialised products and services to these customer segments and undertakes asset liability management as well as proprietary trading for the Bank.
Profit Before Tax (PBT) of the Bank for FY 2024-25 was _ 21,584.11 crore as against _ 18,013.72 crore for FY 2023-24. Profit After Tax (PAT) of the Bank was _ 16,450.08 crore (excluding gain on KGI divestment: _ 13,720.13 crore) in FY 2024-25 compared with _ 13,781.58 crore in FY 2023-24. RoAA for FY 2024-25 was 2.65% compared to 2.61% for FY 2023-24.
FINANCIAL PERFORMANCE
Synopsis of the Profit and Loss Account
| Particulars | FY 2024-25 | FY 2023-24 |
| Net Interest Income | 28,341.78 | 25,993.20 |
| Other Income | 14,961.13 | 10,273.10 |
| Net Total Income | 43,302.91 | 36,266.30 |
| Employee Cost | 7,880.63 | 6,856.37 |
| Other Operating Expenses | 10,895.81 | 9,822.48 |
| Operating Expenditure | 18,776.44 | 16,678.85 |
| Operating Profit | 24,526.47 | 19,587.45 |
| Provision and Contingencies (Net) | 2,942.36 | 1,573.73 |
| - Provision on Advances (Net) | 2,905.44 | 1,594.82 |
| - General Provision Covid-19 related | (52.35) | (124.91) |
| - Provision on Other Receivables | (4.38) | 24.60 |
| - Provision on Investments | 93.65 | 79.22 |
| PBT | 21,584.11 | 18,013.72 |
| Provision for Tax | 5,134.03 | 4,232.14 |
| PAT | 16,450.08 | 13,781.58 |
Net Interest Income
Net Interest Income ("NII") of the Bank for FY 2024-25 was _ 28,341.78 crore compared to _ 25,993.20 crore for FY 2023-24. The Bank reported a Net Interest Margin ("NIM") of 4.96% for FY 2024-25 compared to 5.32% for FY 2023-24. During the year:
The yield on interest earning assets decreased from 9.42% for FY 2023-24 to 9.31% for FY 2024-25 mainly due to fall in the yields of advances and change in asset mix. 62% of the loan book as on 31st March, 2025 is linked to the Repo rate up from 58% as on 31st MarcRs. 2024. Repo rates have been reduced in FY 2024-25 to 6.25% at year end, which was 6.50% in FY 2023-24 for the entire year.
Cost of funds increased from 4.81% in FY 2023-24 to 5.10% in FY 2024-25 primarily due to lower CASA and an increase in the interest rates of term deposits, certificate of deposits and borrowings.
Average interest earning assets increased by 16.93% from _ 482,303.85 crore for FY 2023-24 to _ 563,937.17 crore for FY 2024-25.
Non-Interest Income
(_ in crore)
| Particulars | FY 2024-25 | FY 2023-24 |
| Commission, Exchange and Brokerage | 7,944.26 | 7,048.54 |
| Profit on Sale / Revaluation of Investments* | 4,504.55 | 921.98 |
| Profit on Exchange Transactions (Net) (Including Derivatives) | 1,427.79 | 1,403.27 |
| Profit on Recoveries of Non-Performing Assets Acquired / Stress assets acquired | 391.89 | 303.10 |
| Income From Subsidiaries/Associates Towards Shared Services | 144.38 | 147.20 |
| Dividend From Subsidiaries | 380.00 | 308.90 |
| Others | 168.26 | 140.11 |
| Total Other Income | 14,961.13 | 10,273.10 |
*On 18th June, 2024, the Bank completed the divestment of 70% stake (through a combination of fresh growth capital and share sale) in its subsidiary Kotak Mahindra General Insurance Company Limited ("KGI") to Zurich Insurance Company Limited ("Zurich"). The Bank sold 553,181,595 equity shares of KGI for a consideration of _ 4,095.82 crore, resulting gain from such sale of _ 3,542.64 crore which has been included in Profit on Sale/ Revaluation of Investments.
Non-interest income (excluding gain on KGI divestment) increased from _ 10,273.10 crore in FY 2023-24 to _ 11,418.50 crore in FY 2024-25 due to:
Increase in commission, exchange and brokerage income mainly due to an increase in services charges on loans, direct banking fees and charges, third party distribution income and referral fees.
Higher profit on sale of Exchange Transactions (Net) (Including Derivatives).
Employee Cost
Employee cost of the Bank increased from _ 6,856.37 crore for FY 2023-24 to _ 7,880.63 crore for FY 2024-25. The employee base reduced from over 77,900 as on 31st March, 2024 to over 75,300 as on 31st March, 2025.
Other Operating Expenses
| Particulars | FY 2024-25 | FY 2023-24 |
| Rent, Taxes and Lighting | 1,035.44 | 833.67 |
| Printing and Stationery | 135.95 | 194.41 |
| Advertisement, Publicity and Promotion | 1,009.01 | 970.91 |
| Depreciation on Banks Property | 728.69 | 614.79 |
| Directors Fees, Allowances and Expenses | 5.74 | 5.74 |
| Auditors Fees and Expenses | 5.31 | 4.16 |
| Law Charges | 23.91 | 31.80 |
| Postage, Telephone etc. | 468.93 | 417.84 |
| Repairs and Maintenance | 1,345.54 | 1,102.66 |
| Insurance | 553.45 | 468.90 |
| Professional Charges | 1,857.07 | 1,955.94 |
| Brokerage | 802.06 | 770.58 |
| Goods and Service Tax (GST) Expenses | 564.56 | 518.99 |
| Other Expenditure | 2,378.61 | 1,949.14 |
| Reimbursement From Group Companies | (18.47) | (17.05) |
| Total | 10,895.81 | 9,822.48 |
Other operating expenses were _ 10,895.81 crore for FY 2024-25 compared to _ 9,822.48 crore for FY 2023-24, with the increase primarily in:
Premises- Rent, repair and maintenance costs
Technology spends
PSLC costs
Payment network costs
Recovery expenses and legal charges
Expenditure on Corporate Social Responsibility (CSR) activities.
The total expenses include _ 22.74 crore incurred on account of divestment of stake in KGI to Zurich. The Bank?s Cost-to-Income ratio was 47.17% for FY 2024-25 (43.36% including gain on KGI divestment) compared witRs. 45.99% for FY 2023-24.
Provisions and Contingencies (excluding tax)
Provisions and contingencies (excluding tax) were _ 2,942.36 crore for FY 2024-25 compared to _ 1,573.73 crore for FY 2023-24 primarily due to higher specific provision on loans by _ 1,089.84 crore mainly on account of retail unsecured and microcredit loans, higher provision on Standard Assets by _ 280.61 crore.
The Bank held an aggregate Covid-19-related provision of _ 262.54 crore as of 1st April, 2024. During the year, the Bank has reversed provisions aggregating to _ 52.35 crore based on actual collections/reduction in underlying outstanding and continues to hold provision of _ 210.20 crore as at 31st March, 2025.
Credit cost on Advances (on specific provisions) was 60 bps for FY 2024-25 compared to 40 bps for FY 2023-24.
BALANCE SHEET
The assets and liabilities composition of the Bank, is as follows:
| Liabilities | 31st March, 2025 | 31st March, 2024 |
| Capital and Reserves | 117,145.62 | 96,639.46 |
| Deposits | 499,055.13 | 448,953.75 |
| - Current Account Deposits (CA) | 82,860.62 | 75,208.29 |
| - Fixed Rate Savings Account Deposits (SA) | 111,949.60 | 109,078.50 |
| - Floating Rate Savings Account Deposits (SA) | 19,605.67 | 20,016.66 |
| - Term Deposits (TD) Sweep | 55,626.52 | 47,051.95 |
| - Other TDs | 229,012.72 | 197,598.35 |
| Borrowings | 48,442.76 | 28,368.10 |
| Other Liabilities and Provisions* | 28,980.67 | 26,395.74 |
| Total | 693,624.18 | 600,357.05 |
| Assets | 31st March, 2025 | 31st March, 2024 |
| Cash and Bank Balances | 65,779.15 | 52,788.40 |
| Investments | 181,907.45 | 155,403.76 |
| - Government Securities | 132,458.57 | 113,672.84 |
| - Credit Substitutes | 33,538.79 | 31,595.28 |
| - Other Securities | 15,910.08 | 10,135.64 |
| Advances | 426,909.20 | 376,075.27 |
| Fixed Assets and Other Assets | 19,028.38 | 16,089.62 |
| Total | 693,624.18 | 600,357.05 |
The Bank?s capital adequacy continues to be healthy, with overall CRAR at 22.25% (CET1 ratio 21.10%) as compared to 20.55% (CET1 ratio 19.25%) as on 31st March, 2024.
Deposits
The Bank?s strategy is based on its fundamental philosophy to build a low-cost and stable liability franchise. The Bank?s deposits grew to _ 499,055.13 crore as on 31st March, 2025 compared to _ 448,953.75 crore as on 31st March, 2024. CASA deposits increased to _ 214,415.89 crore as on 31st March, 2025 compared to _ 204,303.45 crore as on 31st March, 2024. CASA ratio stood at 42.96% as on 31st March, 2025 compared to 45.51% as on 31st March, 2024.
Fixed Rate Savings Account (SA) deposits stood at _ 111,949.60 crore and Current Account (CA) deposits stood at _ 82,860.62 crore. Growth in low-cost deposits was impacted by higher interest rate environment and resultant alternate opportunities available with depositors to deploy funds at higher return. Total Term Deposits (TD), including certificate of deposits, grew by 16.35% to _ 284,639.24 crore.
CASA plus term deposits below _ 5 crore account for 78% of the total deposits.
Advances
The classification of advances of the Bank is as follows:
| Particulars | 31st March, 2025 | 31st March, 2024 |
| Home Loans (HL) and Loan Against Property (LAP) | 127,024.95 | 106,725.96 |
| Consumer Bank Working Capital (Secured) | 42,796.90 | 35,997.34 |
| Personal Loans, Business Loans and Consumer Durables | 24,817.79 | 20,048.48 |
| Credit Cards (CC) | 13,420.01 | 14,504.66 |
| Consumer Banking Advances | 208,059.65 | 177,276.45 |
| CV/CE | 43,007.67 | 36,832.99 |
| Agriculture Division | 28,059.10 | 27,850.12 |
| Tractor Finance | 17,815.13 | 15,801.78 |
| Retail Micro Finance | 6,696.92 | 9,983.00 |
| Commercial Banking Advances | 95,578.82 | 90,467.89 |
| Corporate Banking Advances | 92,778.66 | 87,310.46 |
| SME | 35,753.88 | 27,247.22 |
| Others | 12,145.24 | 9,426.71 |
| Advances (A) | 444,316.25 | 391,728.73 |
| Credit Substitutes | 33,538.79 | 31,595.28 |
| Customer Assets (A+B) | 477,855.04 | 423,324.01 |
| IBPC and BRDS (C) | 17,407.05 | 15,653.46 |
| Net Advances (A-C) | 426,909.20 | 376,075.27 |
Advances grew at 13.52% to _ 426,909.20 crore as on 31st March, 2025 compared to _ 376,075.27 crore as on 31st March, 2024. Customer Assets grew at 12.88% to _ 477,855.04 crore as on 31st March, 2025 compared to _ 423,324.01 crore as on 31st March, 2024. Growth in Advances was seen mainly in the SME business Consumer banking segment through Mortgage & working capital (Secured).
The Bank?s credit deposit ratio stood at 85.54% as of 31st March, 2025 over 83.77% as of 31st March, 2024.
Asset Quality
The position of Gross and Net NPA is, as under:
| Particulars | 31st March, 2025 | 31st March, 2024 |
| Gross NPA | 6,133.85 | 5,274.78 |
| Gross NPA % | 1.42% | 1.39% |
| Net NPA | 1,343.44 | 1,270.57 |
| Net NPA % | 0.31% | 0.34% |
Slippages for FY 2024-25 were _ 6,378.62 crore (FY 2023-24: _ 5,001.11 crore) whereas recoveries and upgrades were _ 2,776.42 crore (FY 2023-24: _ 3,236.73 crore). The provision coverage ratio, gross of technical write-off, was 80.38% as of 31st March, 2025 as compared to 80.07% as of 31st March, 2024. Total provisioning towards advances (including specific, standard, Covid-related, etc.) held as on 31st March, 2025 was _ 6,960.90 crore.
Restructuring
Standard Restructured Fund Based outstanding under the Covid resolution frameworks was _ 91.16 crore as at 31st March, 2025 (0.02% of Advances) and under MSME resolution frameworks was _ 109.33 crore as at 31st March, 2025 (0.03% of Advances). The Bank has maintained restructuring provision of _ 58.88 crore as on 31st March, 2025.
Directed Lending
Priority Sector Lending and Investments
The RBI guidelines on priority sector lending require banks to lend 40.0% of their adjusted net bank credit (ANBC), to fund certain types of activities carried out by specified borrowers. Out of the overall target of 40.0%, banks are required to lend a minimum of 18.0% of their ANBC to the agriculture sector. Sub-targets of 10.0% for lending to small and marginal farmers (out of agriculture) and 7.5% lending target to micro-enterprises were introduced from Fiscal 2016. Average lending to non-corporate farmers is notified by the RBI on basis of the banking system?s average level at the beginning of each year. The RBI notified a target level of 13.78% of ANBC for this purpose for fiscal 2025 (FY 2023-24: 13.78%). The banks are also required to lend 12.0% of their ANBC to certain borrowers under the ‘weaker section? category. Priority sector lending achievement is evaluated on a quarterly average basis.
The shortfall in the amount required to be lent to the priority sectors and weaker sections may be required to be deposited in funds with government sponsored Indian development banks, such as the National Bank for Agriculture and Rural Development, the Small Industries Development Bank of India, the National Housing Bank, MUDRA Limited and other financial institutions as decided by the RBI from time to time. These deposits have a maturity of up to seven years and carry interest rates lower than market rates. As on 31st March, 2025, the Bank?s total investment in such bonds was _ 2,050.97 crore (31st March, 2024: _ 3,253.85 crore), which was fully eligible for consideration in overall priority sector lending achievement.
In FY 2015-16, the RBI introduced Priority Sector Lending Certificates (PSLCs) scheme to enable banks to achieve the priority sector lending target and sub-targets by purchase of PSLC instruments in the event of shortfall and at the same time incentivise the surplus banks, thereby enhancing lending to the categories under the priority sector. In FY 2024-25, the Bank has sold Priority Sector Lending Certificates (PSLCs) amounting to _ 111,092.00 crore (FY 2023-24: _ 67,554 crore) and purchased PSLCs amounting to _ 22,831.50 crore (FY 2023-24: _ 14,090 crore).
As prescribed in the RBI guideline, the Bank?s priority sector lending achievement is computed on a quarterly average basis. Total average priority sector lending for FY 2024-25 was _ 139,695.48 crore (FY 2023-24: _ 121,619.65 crore), constituting 45.09% (FY 2023-24: 44.06%) of ANBC, against the requirement of 40.0% of ANBC.
REMOVAL OF SUPERVISORY RESTRICTIONS – RBI LETTER DATED _TH FEBRUARY, _ _6
The Bank had received an order dated 24th April, 2024 (‘Order?) from the RBI, directing the Bank to cease and desist, with effect from 24th April, 2024 from on-boarding new customers through the Bank?s online and mobile banking channels; and issuing fresh credit cards. The Order was based, inter alia, on the deficiencies observed by the RBI in the Information Technology (IT) Examinations of the Bank, for the years 2022 and 2023.
The RBI, vide its letter dated 12th February, 2025, communicated its decision to the Bank to lift the aforementioned restrictions placed on the Bank, having satisfied itself of the remedial measures undertaken by the Bank to address the supervisory concerns and the submission of compliances made to it (including the report of the external Auditor).
A BREIF ANALYSIS OF THE PERFORMANCE OF VARIOUS DIVISIONS OF THE BANK IS, AS FOLLOWS:
CONSUMER BANKING
The Consumer Banking business serves a wide spectrum of customers across domestic individuals and households, non-residents, small- and medium business segments, for a range of products from Savings and Current Accounts to Term Deposits, Credit Cards, Unsecured and Secured Loans, Working Capital, Digital Payments, Insurance Protection and Investments.
Customer Centricity at the Core
This year, the focus continues to be on customer centricity and the Bank has built propositions around this principle by leveraging digital capabilities. In FY 2024-25, the Bank has undertaken changes across its Distribution, Product and Proposition frameworks—designed to deliver unique, meaningful and relevant propositions.
Strategically organised the distribution architecture to align with customer personas
The Bank has realigned the distribution architecture across physical, digital and voice channels, crafting product-based propositions to effectively serve defined customer personas within the target segments.
The Bank?s physical branches are now designed with targeted customer personas in mind. For instance, a branch located in a residential area addresses different customer needs compared to one in a commercial hub. This persona-driven approach is shaping all aspects of the branch strategy, including branch staff?s skill set requirements and capacity planning.
Each of the digital apps is designed to deliver an intuitive UI/UX, relevant functionalities and targeted propositions tailored to the needs of diverse customer segments. In FY 2024–25, the Bank not only enhanced the existing apps but also launched the new Kotak Mobile Banking App to further elevate the customer experience.
The Bank?s Voice platform serves as a bridge between digital and physical channels, supporting both customers and frontline teams. It offers a dedicated hotline for customer assistance, while also enabling branch colleagues to access information on products, processes and systems. This integrated support ensures seamless resolution of inquiries, ultimately enhancing the overall customer experience.
Curated propositions through the customer lens
The Bank?s product strategy has evolved from a one-size-fits-all approach to one that is differentiated and segment-relevant. This approach balances cost efficiency with customer value creation. The Bank has curated bespoke propositions tailored for its chosen customer segments, drawing from its extensive product suite across key financial use cases, such as saving, investing, borrowing and protection, leveraging offerings from across the group companies.
Furthermore, all of three channels work on deepening customer engagement guided by defined personas right from the onboarding stage through co-origination of products and continuing across the customer lifecycle with personalised nudges and targeted offers. By driving customer engagement using a customer 360 approach and by integrating data analytics and leveraging data across operations, the Bank has strengthened its risk underwriting and customer profiling.
Kotak Solitaire
A manifestation of this approach is evident in the recent launch of Kotak Solitaire, an invite only banking proposition tailored for affluent customers. This harnesses the entire product suite of the Kotak Group and reflects the vision of delivering seamless and personalised financial services, exclusive credit lines and elite lifestyle privileges.
The core features of the Solitaire proposition include a dedicated relationship manager, wealth management services and a 3-in-1 offering that combines the benefits of banking, trading and demat account facilities. This proposition provides pricing benefits on trading, a dedicated dealer desk and access to research recommendations through referrals to Kotak Securities. It also includes pre-approved home loans and luxury vehicle loans via Kotak Mahindra Prime, enabling seamless funding for major financial decisions. In addition, it offers preferential pricing across a range of banking products such as forex transactions, locker facilities and more.
The standout feature is an exclusive credit card, designed with bespoke privileges including premium travel benefits such as zero forex mark-up, no cap on reward point earnings, unlimited airport lounge access and access to exclusive events, among others.
For entrepreneurs, it offers strategic cash flow management, customised lending solutions, pre-approved forex limits, payment automation and a complimentary business credit card to power every business move.
Kotak Solitaire is designed to deepen engagement, increase wallet share and build long-term loyalty among the most valued customers. As the Bank continues to drive the ‘One Kotak? agenda, Solitaire will serve as a cornerstone of its strategy, enhancing customer value through differentiated and holistic offerings.
Driving service excellence through frontline empowerment
To elevate customer service at the Bank?s branches, focus was on two key areas: branch decongestion and optimising the time spent by the branch teams on operational tasks. Decongestion is achieved by redirecting customer interactions to digital and voice channels, ensuring faster and more convenient service. For customers who continue to visit branches, the Bank enhanced operational efficiency through its Frontline Digitisation Initiatives. The key initiatives include optimisation of transaction (NEFT, IMPS and IFT) processing times through Transaction Authorisation System (TAS), reduction of batch processing time for daily branch reports and introduction of an AI-powered bot.
Strengthening the liabilities franchise
The Bank?s deposits grew by 11% in FY 2024–25, driven by a strong 18% year-on-year growth in ActivMoney. The persona-based approach, has played an enabling role in optimising the deposit mix as reflected in the efficient CA to SA ratio and cost of funds
As on 31st March, 2025, the Bank had 2,148 branches, 3,295 Automated Teller Machines ("ATMs") and Recyclers. The Bank also has a branch at Dubai International Financial Centre ("DIFC") and Gujarat International Finance Tec-City ("GIFT City").
Building Momentum on Assets while managing risk
Alongside strengthening liabilities, the Bank has maintained a strategic focus in growing the consumer assets segment, which has enhanced portfolio granularity and improved the overall yield.
The consumer assets book grew 17% year-on-year growth despite the RBI restriction on issuance of credit cards. The Bank acquired a _ 3,330 Crore portfolio of personal loans (from Standard Chartered Bank, India) during the year.
The secured business, consisting of Home Loans and Loan Against Property (LAP) and Working Capital, registered growth of 19% each in FY 2024-25.
The unsecured loans, excluding credit cards, grew 24%, primarily supported by the _ 3,330 crore personal loan acquisition (from Standard Chartered Bank, India) during the year.
The mortgage business helps build a long-term relationship with the customer and helps increase the wallet share of the customer, particularly in the affluent segment. This segment will continue to remain a key focus area for the Bank. The LAP market continues to be steady. The Bank has always been a strong player in this segment and will continue to focus on this going forward, given the Bank?s strengths in the Self-employed segment. The introduction of a new loan origination system has resulted in better transparency and customer experience.
The Bank has strengthened its business banking segment. The secured business banking portfolio, primarily comprising small SMEs, continues to perform well across industry segments and geographies. In this business, the Bank is able to serve the customer across all their financial and non-financial needs, business and individual.
The Bank introduced several key offerings to deepen customer engagement such as
Biz-Buddy, an AI-powered recommendation engine, to offer personalised current account and business solutions, improving onboarding efficiency and client engagement.
Integrated Solutions, a payment collection service such as POS and QR bundled with current account, to provide a seamless one-stop solution for business clients.
The Bank has rolled out digital support tools to deepen merchant engagement, including WhatsApp Banking and an AI-enabled Chatbot, ensuring faster query resolution and continuous support.
Technology-led engagement
Key initiatives undertaken to further strengthen the Banks consumer assets portfolio include:
Technology- led journeys: Seamless assisted and DIY experiences powered by advanced digital platforms—for example, the Personal Loans journey which now includes digital onboarding via Business Rule Engines (BRE), personalised nudges, swift disbursement and efficient servicing.
Integrated data analytics: Leveraging data across operations to strengthen risk underwriting and customer profiling. This has enabled us to deepen engagement through targeted offerings based on personas, transaction behaviour and external activity.
Refreshed Customer 360 approach: The Bank is driving customer engagement using a Customer 360 approach to achieve better execution across all channels. Through Customer 360 approach, the Bank is working to convert a more generalised engagement model to a sharper customer centric approach. Prioritising long-term relationship products like Home Loans and LAP have further deepened engagement and provided opportunities for holistic relationship.
Kotak811 - where Banking meets Technology
In FY 2024-25, Kotak811 integrated advanced technologies and data analytics to enhance customer experience and accelerate growth. The key highlights are below:
Restarted Acquisition: Kotak811 revamped its tech stack and strengthened the guardrails by leveraging AI/ML to deliver secure, frictionless and scalable customer onboarding.
Enhanced the Kotak811 App: With minimalistic and unbiased design that offers 100+ features, the app continues to be top-ranking app on both App Store and Play store. It provides seamless digital journeys for sachet-sized cards, loans, investment and protection plans, all accessible in 2-3 clicks. Notably, it is among the few banking apps that facilitates and rewards digital payments.
Optimising Physical Interaction: Supported by the hybrid platforms (built for both field and voice), sales officers can now offer multiple services in the same interaction (rather than only undertaking a physical KYC), such as assist in the addition of funds via QR and enroll for multiple financial products, including debit cards, credit cards, insurance and investments on the basis of the customer?s financial needs.
Strategic Focus in FY 2024-25
Focused on the acquisition of better-quality customers with higher savings potential.
811Super was designed for customers with higher credit activity per month. The proposition includes a 5% cashback (up to _ 6,000 annually) on debit card spends, improving customer engagement.
Early engagement (while onboarding through Kotak811App) has driven product penetration and increased wallet share.
Strengthening Customer Service
The Bank has strengthened the customer service and grievance redressal systems through the deployment of Salesforce system, enabling service request automation and transitioning from manual processes to API-driven executions. Supported by a dedicated team (following the Kaizen principles), these enhancements led to a 28% year-on-year reduction in net complaints.
COMMERCIAL BANKING
The Bank?s Commercial Banking business focuses on meeting the banking and financial needs of various segments, with specialised units offering financial solutions in the areas of Commercial Vehicles ("CV"), Construction Equipment ("CE"), Tractor and Farm Equipment ("Tractor"), SMEs operating in the Agriculture Value Chain and Microcredit. The majority of the customers to whom this business caters are from the semi-urban and rural area segment, forming a part of the priority sector. This business plays a significant role in meeting the financial inclusion goals by financing deep into ‘Bharat?.
Commercial Vehicle
In FY 2024-25, the Commercial Vehicle industry declined 1% YoY in unit terms. The Bank has grown 2% in unit terms in the same period. The dip in industry volumes is primarily on account of lower government spending, implementation of model code of conduct in the wake of state and central elections, heat wave and lower freight demand. In the goods segment, the industry has declined 3%, whereas in the passenger segment, the industry has grown at 16% in unit terms. The Bank has grown 1% in the goods segment and 11% in the passenger segment in unit terms.
Lower load availability and excess vehicle supply, especially in the retail segment, made collection environment challenging in the past few quarters. Proactive risk interventions and focus on improving and building a quality portfolio will show improving trend going forward.
Construction Equipment
For FY 2024-25, the Construction Equipment industry grew at a modest rate of 2% YoY in unit terms. Disbursements for the Bank grew 6% YoY, which helped in gaining the market share. The modest industry growth was primarily on account of multiple state and central elections, lower retail buying, heat wave, liquidity tightness and overall low government spending. In addition, the allocation of new projects from Centre and State Governments was muted in FY 2024-25.
On the collection front, the Bank saw some deterioration due to the above factors. However, with risk analytics and credit policy interventions, improvement was visible in Q4FY25.
Tractor and Farm Equipment
For FY 2024-25, the tractor industry grew 7%, backed by near-normal monsoons, government support and rising adoption of mechanisation. The Bank?s disbursement growth in the tractor business was in line with the industry growth, maintaining its leadership position. Around 90% of these loans are eligible for PSL, demonstrating the Bank?s continued commitment towards making difference in farmer?s lives and livelihood. This was aided by focus on new products/customer segments, deeper geographies, productivity per employee through digital adoption for onboarding and collections.
Agri Business
FY 2024-25 commenced on a stable footing with respect to Kharif and Rabi output. Steady agriculture commodity prices for a reasonable time horizon, a near-normal monsoon and continued government policy thrust for value-chain integration across key sectors provided a steady backdrop for Agri credit flow and value-added supply chain building. Agri Business Group, with a stable portfolio quality continued to adopt a risk-calibrated focused NTB growth strategy, with sharper customer segmentation, strategic distribution and differentiated underwriting approaches to strengthen portfolio resilience.
Microcredit
FY 2024-25 was one of the most challenging years for the Microcredit Business. There was an increase in delinquency levels across the industry, mainly due to over-leveraging by borrowers. The weak and erratic monsoons in FY 2023-24, heatwave in Q1FY25, followed by floods in certain states, impacted rural household incomes, leading to issues in the repayment capacity of borrowers. The Bank had taken a cautious stance with respect to disbursements and had taken several measures to improve collections and on-board better quality of customers. Credit costs have been higher for the microcredit business in FY 2024-25. Some improvement in collection efficiency was witnessed in Q4FY25 after the implementation of guardrails announced by Self-Regulatory Organisations.
Gold Loan
The Gold Loan industry in India experienced a healthy growth of over 56%, driven by factors such as increased gold prices and the need for quick, collateral-based financing solution. The Bank is now offering gold loans from more than 480 branches, i.e., approximately 25% of its total branch network.
WHOLESALE BANKING
The Bank?s Wholesale Business has a number of units catering to various customer and industry segments, including major Indian corporates, conglomerates, financial institutions, public sector undertakings, multinational companies, financial sponsors, including private equity funds, portfolio investors, new age companies, small and medium enterprises and realty businesses, offering a wide range of banking services covering their working capital, medium-term finance, project finance, trade and supply-chain finance, foreign exchange services, other transaction banking requirements, custody services, debt capital markets, structured financing solutions and treasury services. The focus has been on customised solutions delivered through efficient technology platforms backed by high-quality service. The Bank?s core focus has been to acquire quality customers on a consistent basis and ensure value add through cross-selling of varied products and services.
Industry
Credit demand growth during the year FY 2024-25 was a mixed bag. Of the customer segments, credit demand from the SME segment grew at a much faster pace than from the larger corporates. Certain service segments, such as Wholesale Trade and Commercial Real Estate, also grew faster. However, on the whole, green shoots seen in private capex in the previous year did not take off as expected and private capex and overall credit demand continued to remain muted. Urban consumption witnessed a slowdown while rural consumption growth tapered. Government capex too was muted and this affected infrastructure spend that had driven credit demand in the previous years.
On the other hand, tight liquidity conditions kept banks? cost of funds at elevated levels. Capital markets were buoyant for a large part of the year and this further affected the competitiveness of the banks in lending to larger corporates. There was also a general consensus in the market on potential drop in the benchmark interest rates and which played out towards the end of the year. These factors constrained banks? ability to pass on increased cost of funds in their lending and this affected lending spreads in the corporate banking space. It became imperative to supplement asset incomes with liability incomes and fee income streams to maintain profitability and healthy ATROE.
Reinventing of the Business Model
Against the backdrop of the above challenges, the Wholesale Bank accelerated its journey towards excellence, which it had embarked upon a few years back and which primarily focused on moving away from dependence on only asset incomes and instead move towards garnering greater flows of customers and supplementing asset incomes through cross-selling of other transaction banking products and non-risk income streams. During the year, the Bank increased the proportion of short-term and working capital loans in its lending book. While making this a stronger risk proposition, this also helped shield the Bank against drastic spread drops in the event of a reduction in benchmark interest rates. The Bank strengthened its Trade and Supply Chain proposition, including through digital offerings and this helped the Bank gain a greater share of customer flows, which, in turn, helped liability and fee incomes. The Wholesale Bank also implemented a number of initiatives, including through digital projects, focused on improving customer experience while increasing productivity and efficiency. These initiatives have ensured that the Wholesale Bank has been able to deliver strong growth across parameters, including Assets, Liability and Fee incomes, resulting in a healthy growth in Profitability and attractive ATROE.
The Bank has been awarded as the ‘Best Bank for Large Corporates in India? by Euromoney in its Awards for Excellence, 2025. The Bank is winning this award for the second consecutive year and this is a testimony to the Wholesale Bank?s capabilities and business model.
Granular Growth
The Bank has always preferred granular growth instead of taking concentration risks. In line with this philosophy, the Bank grew its SME and Mid-Market segments at much higher rates than the rest of the Wholesale Bank. During the year, the Bank has increased its market share in these segments. The acquisition engine has been firing well and New to Bank customer additions were especially strong. This was made possible through implementation of a comprehensive customer acquisition and retention strategy, including expansion to new locations in the country, retraining of the salesforce, better engagement with acquisition channels, more customer outreach programs, process improvements with a view to reduce Turn-Around-Times and focus on improving customer experience and engagement.
The Bank continued to strengthen its Data Analytics and Business intelligence for scoping the market for opportunities. Digital Banking Solution platform such as fyn were enriched and strengthened for embedding customers? day to day banking. While scale, along with efficiency initiatives, brought better productivity, the Bank also focused on returns on a customer through better cross-selling of services, including of the broader Kotak Group, such as corporate salary, insurance, wealth management and others.
In line with the strong book growth, the Bank also improved its guardrails with better credit monitoring. The asset quality has remained healthy, with minimal slippages during the year. These segments remain key focus areas and the Bank will continue to focus on its growth trajectory here going forward.
Centre of Excellences
Among the larger corporates, the Bank has invested in developing expertise in specific areas and developed them into Centre of Excellences including in Structured Lending, Infrastructure Financing, Real Estate Financing, Banking for Financial Sponsors, amongst others. The Bank?s expertise here is disproportionately higher than the Bank?s Asset share and this has helped maintain profitability in this competitive environment.
Infrastructure Lending
The Bank is committed to India?s infrastructure development through its products and services catering to the entire value chain in the development cycle of an infrastructure asset. The Bank?s strategy is to adopt a calibrated approach by focusing on high-rated groups and borrowers while diversifying exposure across sectors and ownership structures, with a special focus on private equity and pension fund backed platforms and InvITs. The Bank offers tailored solutions in this space based on the project stage (under construction/operational), product fitment (loans, non-fund, forex, etc.) and situation-specific (bridge, acquisition finance). The Bank also help its infrastructure clients tap into the debt capital markets through structuring, syndication as well as underwriting mandates. During the year, the Bank concluded a number of deals in the roads and renewables segment, aided by significant deal flow and in the digital infrastructure space, viz., telecom, telecom towers and data-centres, which saw significant inbound investments by offshore investors. The Bank continues to pursue the entire gamut of opportunities in the infrastructure sector with the right-sizing of risk and returns.
Real Estate Lending
Growth in the real estate book continued to be muted most of the year due to large repayments, driven by robust sales by developers across residential projects, though disbursements picked up in the later part of the year. During the year, the Bank focused on improving its profitability in this segment by rebalancing its portfolio away from low-yielding deals and towards higher spreads and fee incomes. The Bank remains optimistic on this sector, with a strong disbursal pipeline and a prudent, risk-calibrated lending approach.
Financial Sponsors
The Bank has a dedicated financial sponsor coverage team to focus on funds and investee companies and provide a comprehensive coverage across the full spectrum of banking solutions. The aim is to cover the large bulge bracket funds, which function and invest akin to large conglomerates in the country operating across sectors and aiding in improving the corporate governance of their investee entities. The Bank has a significant market share in routing of flows through its counters as well as providing structured and debt capital solutions to these marquee players. This segment has demonstrated robust performance, achieving a strong growth in income and book size in the past few years. The Bank expects that this segment will be a significant lever in the growth of wholesale Bank going forward.
Multinational Companies
Multinationals continue to see India as an attractive destination to serve as a global manufacturing hub. Strong domestic demand continues to be another magnet pulling in global investment. The Bank offers a full suite of banking and digital services to companies entering India and partners in their growth. Dedicated marketing efforts were launched aimed towards collaboration with the ecosystem in order to operationalise the Bank?s philosophy of ‘Catch them young?. The Bank has a co-operation agreement with ING Bank globally covering a number of countries, which also helps the Bank in targeting a greater number of multinational corporates in India. In line with the FDI flows into the country, the Bank has a dedicated corridor coverage strategy supported by country-specific desks. Significant success has been seen from the Korea Desk while the Japan Desk holds immense promise for the coming year. Capital markets have been a cornerstone of growth this year, with Kotak being the banking partner for the largest IPO of FY 2024-25: Hyundai Motor India Ltd.
Financial Institutions
This sector remains of prime focus to the Bank. The asset quality of the book in this segment remains steady and the Bank is growing the book selectively with a thrust on on-lending for priority sector to NBFCs and opportunities, which are ROE accretive. The Bank continues to be calibrated in lending to NBFCs in the unsecured space.
Overseas Book
The Bank has strengthened its proposition to corporates for their overseas subsidiaries and external trade through its GIFT City branch. During the year, the Bank enhanced its core technology systems in its GIFT branch, which has equipped the branch to offer a wider bouquet of Trade and Loan products. As a result, the year saw strong growth in both the Trade and non-Trade loan book of the GIFT branch. Most of these transactions are backed by strong relationships, with and support from the Indian parent of the borrower and as such the GIFT branch has helped the Bank expand its customer wallet while limiting its risk.
Syndication and Debt Capital Markets
In addition to direct lending to its clients, the Bank arranged debt financing for its clients from the capital market and loan markets. This year, the Bank clocked its highest ever DCM fees, supported by record volumes and the closure of a number of large marquee deals across diverse products and sectors, including High-Grade and High-Yield Bonds, Real Estate, including one of the largest credit bond issuances, infrastructure transactions across Under-Construction and Operational portfolios in roads, renewables, data centres and InvITs and deals in the Pharma, Retail, Financial Services and Auto Components sectors, among others.
The Bank also assisted a number of its large corporate customers to access the bond market to raise funds at a competitive pricing and enjoys a leading place in the industry.
Focus on Transaction Banking and Non-Asset Income Streams
The Bank continues to focus on income from non-credit streams, including Forex, Cash Management and other Transaction Banking products. Over the years, the proportion of non-risk income stream has steadily increased resulting in higher Returns on Equity.
Trade
The Bank is especially focused on increasing penetration in Trade financing. The Bank has invested in bolstering its Trade product and sales expertise, introducing newer products, providing structured solutions to customers? trade requirements and in digitizing the Trade journey. During the year, a number of new products were launched. The Bank can today offer Paperless Imports, which is a key requirement of larger corporates. In a significant step towards enhancing its international banking footprint, the Bank successfully launched trade product capabilities at the GIFT City branch. This strategic move aligns with the Bank?s vision to offer end-to-end cross-border trade solutions through India?s emerging financial hub.
The Bank also expanded fyn?s capabilities by introducing Bank Guarantees, further strengthening its digital trade proposition. The Bank has also set up a dedicated help desk for fyn. This team has hand-held clients through every step of their transaction journey, having trained over 1,500 clients in FY 2024-25. By actively studying rejection trends and customer feedback across trade products, the Bank has implemented focused changes that has improved operational efficiency and significantly reduced turnaround time. fyn continues to evolve as a robust, end-to-end platform, delivering agility, transparency and convenience to trade clients.
Supply Chain Finance (SCF) is another prime area of focus for the Wholesale Bank and the Bank continued its three-pronged approach of enhancing granular business, building structured trade deals and creating strong foundations for enabling seamless digital SCF transactions. The Bank has built unique journeys for its customers on the fyn platform while also collaborating with other Fintech platforms to offer a stronger digital proposition.
During the year, both the Trade and the Supply Chain books have witnessed strong growth and this has helped in getting a larger share of customer flows and consequently higher liability and fee incomes.
Transaction Banking and Cash Management Services
During the year, the Bank continued its digital-first, solution-oriented approach in its Cash Management Services (CMS) for clients across industries, driving innovation, scale and customer-centricity in a dynamically evolving ecosystem.
The Bank?s CMS Vision for the year was rooted in delivering value to clients through customised, digitally-enabled solutions. The team focused on driving Current Account growth by enhancing wallet share and cross-selling new-age offerings. Emphasis was placed on making the front line more solution-driven, backed by an increased focus on digital onboarding, mobile interfaces and fyn integrations. With a focus on deepening wallet share, the Bank?s transaction value grew by 36% YoY.
The year was also marked by several Product-Led Innovations and enhancements. Enterprise Payments saw investments to improve resiliency and uptime, the Bank?s new high-volume API-based stack entered phased development for faster straight-through processing. The Bank made significant investments in Risk Management in response to growing frauds in the retail space in the industry. The Bank has also enhanced its CMS product technology stack, which is helping it penetrate segments such as Mutual funds and Payment Aggregators, while also helping it build strategic solutions for key players in the BFSI and Capital Markets space. The Bank has also launched an enhanced e-collections stack, which offers capabilities such as near-real-time data posting and several specialised use cases catering to capital markets, mutual funds and B2B collections. It was another good year for tax payments, with almost 2x growth in value processed and addition of key partners.
The Bank also strengthened its position in the capital market space with the Bank being selected as the banker to the issue and sponsor bank for country?s top IPOs this year. The Bank handled 19 mainboard IPOs this year, with a cumulative issue size of over _ 84,000 crore.
Customer experience continued to be a focus area. CMS onboarding TAT was reduced by 80% to under 2 days for more than two third of the setups - enabled by a streamlined CMS Mid Office and digital signing processes. DIY journeys, streamlining of multiple application journeys and revamp of the onboarding policy led to a sharp rise in setups, especially across the SME and Mid-market segments.
During the year, the Bank received multiple accolades and recognition across various domestic and global platforms.
The increase in the cost of funds has got the focus back on liabilities and liquidity management. The focus on increasing the liability side of the bank?s business, mainly core current account, term deposits and other non-risk income streams continued in line with the overall intention to improve the quality of income from the clients.
Custodial Services
Offshore Custody flows remained strong for larger part of the year on the back of strong capital markets. Market volatility has impacted the flows towards the end of the year. While foreign institutional investors were cautious, domestic institutions saw increased activity. During the year, the Bank continued to deepen its market penetration and successfully on-boarded new clients across both domestic and offshore custody businesses, positioning itself well for future growth. Average custody balances grew strongly during the year.
In FY 2024-25, we secured a license in GIFT City to provide Global Custody Services, expanding our capability to provide custodial services for assets held internationally. This initiative enables us to support both our domestic and offshore clients as they invest in a broader range of foreign asset classes, reinforcing our commitment to offering comprehensive, cross-border solutions.
Risk Management
Over the years, the Bank has ensured that growth has been achieved in a profitable manner without compromising the health of the book. Its portfolio is well-diversified and industry, group and company-specific exposure limits are reviewed periodically. The entire portfolio is rated by internal credit rating tools, which facilitates appropriate credit selection and monitoring. Exposure, over the years, has been confined to segments with credit comfort in terms of better rated exposure, industries with a positive outlook and where pricing has been adequate for the risk being underwritten. These practices helped ensure that the overall portfolio continued to show robust characteristics throughout the year and the Wholesale Bank, this year again witnessed low credit cost, delivering continued improvement in the risk-reward ratio. Pricing models such as Risk Adjusted Return on Capital (RaRoC) measurements are now embedded in the system. Due to these initiatives, the focus is high on ensuring the right risk-return balance and on maximising non-credit income streams. The Bank?s focus on Risk management has helped the business to optimise its Risk Weighted assets as a percentage of assets in the past few years despite growing its SME and Mid-Market book at a faster rate.
In summary, a good growth in Assets, especially in the SME and Mid-Market segments, focus on fee incomes, focus on improving risk-return metrics, strong liability incomes and controlled credit costs have helped the Wholesale Bank preserve its profitability and maintain a healthy After-Tax Return on Equity (ATROE) and positioned it strongly to navigate any emerging challenges in the market.
TREASURY
Global markets started FY 2025 with the hopes of a break in the long US Fed pause in favour of a reduction in policy rates. While waiting, markets remained range-bound with intermittent volatility. Market built expectations, driving US10YT from about 4.2% to 3.6% in September 2024—the session where the US Fed signalled a lowering of the rate by 50 bps. The first double cut was followed by another two cuts of 25 bps each. However, the latter cuts got mislaid in the US inflation and data noise. Between September, 2024 and January, 2025, while the US Fed cut policy rates by 100 bps, the US10YT rose by 120bps. Start of the new US presidential term in January 2025 with sweeping changes in governmental delivery structure and inward-biased trade policies led to further volatility.
While the US markets decided on directions, the Indian bond market was a story of downward yield bias. India?s inclusion in Global bond indices, tamed inflation expectations (and hence expectations of policy rate reductions) and continued fiscal prudence were key drivers for IN10YT yields. The RBI embarked on reducing policy rates in February 2025, as well as an injection of systemic liquidity.
In the foreign exchange markets, the INR has broadly retained its depreciation bias (2.5% fall in FY 2024-25 from the previous year), with most of the depreciation occurring in RS.2FY25. With robust inflows and a weakening USD index in RS.1FY25, the INR was stable—largely on account of the RBI containing its volatility within a tight range. Mounting pressure and strength of the green back saw the INR coming under pressure in RS.2FY25. Unrelenting outflows from the equity markets did not help. After February, as the USD started weakening in response to US economic policies, the INR also showed a strengthening bias, closing the year at _ 85.79 from a high of _ 87.96.
Market Levels in FY 2024-25
| Open | High | Low | Close | Net change | |
| 10y India GILT yield | 7.1 | 7.25 | 6.58 | 6.58 | -7.30% |
| 10y US GILT yield | 4.19 | 4.8 | 3.6 | 4.21 | 0.50% |
| USD/INR | 83.37 | 87.95 | 82.96 | 85.79 | 2.90% |
| US Dollar Index | 104.5 | 110.2 | 100.2 | 104.2 | -0.3% |
| EUR/USD | 1.079 | 1.1214 | 1.0141 | 1.0816 | 0.20% |
| Nifty | 22,455 | 26,277 | 21,281 | 23,519 | 12.80% |
| Gold (USD per Troy ounce) | 2,250 | 3.124 | 2,250 | 3,124 | 13.30% |
Source: Bloomberg
With bond yields falling in the backdrop of the RBI rate cuts and liquidity measures, the Fixed Income desks positioned itself appropriately to capture the opportunities while continuing to manage the associated risks. With global FX and interest rates markets being volatile, the FX and Derivatives risk focussed on low-risk short term churn and spread strategies. The Equities desk continued to focus on well calibrated investment strategies as equity markets saw volatility.
The Treasury Primary Dealer (PD) desk was able to achieve its regulatory targets of retail distribution, trading volumes and auction bidding for Government securities and T-Bills successfully.
The Treasury client coverage teams continue to focus on servicing its FX customers for conversion as well as for hedging their exposures. Foreign exchange flows from customers grew as compared to the previous year on increased trade as well as capital flows. With forward premiums increasing from the very low levels of the previous year, there was a pick-up in client hedging activity. The Bank has continued its focus on a strengthening its digital client FX offering and also providing the Bank the ability to scale up its business manifold in a robust fashion.
The Bullion desk continued building the annuity book of Gold Loans, providing stability and sustained profitability.
System liquidity was in surplus until December, 2024, post which it turned into deficit. The Balance Sheet Management Unit (BMU) managed the liquidity requirements of the Bank optimally and efficiently, ensuring adequate liquidity and ALM to support the needs for credit and investment. Liquidity ratios remained above prudential internal thresholds. BMU also monitored and managed tightly the liquidity and interest rate risks in the balance sheet. Regulatory investments of the Bank were managed in an optimal fashion while balancing risks versus returns.
The Bank?s Asset Liability Committee (ALCO), which also functions as the Investment Committee, maintained a cautious and vigilant approach with a conservative risk appetite in its oversight of Market Risk, Interest Rate and Liquidity Gaps, counterparty and country exposures.
PRIVATE BANKING
The Bank?s private banking arm, caters to a number of distinguished Indian families and is one of the oldest and the most respected Indian private banking firms, managing wealth for 60% of India?s top 100 families (Source: Forbes India Rich List 2024), with clients ranging from entrepreneurs to business families and professionals.
It provides an open architecture proposition to its clients, offering a plethora of private banking products, platforms and solutions. This business, catering to Ultra HNI investors, has a strong distribution capability for private clients through distribution/referral model across equities, fixed income and alternates. In addition to comprehensive financial solutions that go beyond investments, the division provides banking and credit, consolidated reporting, referral for estate planning services, family office services and other various products and services to its Private Banking clients. With an in-depth understanding of client requirements and expertise across various asset classes, this business offers the widest range of financial solutions.
The private banking arm has added approximately 2,692 new families in FY 2024-25.
Launched a multi-media ATL campaign to increase salience and strengthen differentiation by showcasing its investment prowess, thereby enhancing its aspirational quotient
Further strengthened its propositions for the Global Indian
Continued to leverage analytics to not only offer the right product mix for clients, but to also connect with them timely to address their needs
Focused on technological initiatives both at the client level and at the internal team level, with the aim of enhancing productivity and customer experience, coupled with improving cost efficiencies and reducing TAT
Continued to build the new brand theme of ‘Live Your Purpose? through unique client engagements throughout the year
It has consistently been recognised across multiple global and domestic platforms. Some of the recent accolades include:
Best Private Bank in India – Highly Commended – The Asset Triple A Private Capital Awards, 2024
Best Private Bank in India – Highly Commended – PWM & The Banker Global Private Banking Awards, 2024
Digital Private Bank of the Year, India – The Asset Triple A Digital Awards, 2025
ASSET RECONSTRUCTION
The Bank?s Asset Reconstruction Division (ARD) looks at opportunities and takes exposure in distressed/Non-Performing Assets ("NPA") accounts through Security Receipts ("SR") investments, Stressed/NPA portfolio buyout from other banks, priority funding and working capital assistance with an aim to resolve and turn them around. The Bank has been active in the distressed asset buyouts and investments space, for almost two decades.
The Resolution Process has gained momentum with the support of various judicial forums such as Debt Recovery Tribunals (DRTs), Debt Recovery Appellate Tribunals (DRATs), High Courts, Supreme Court and National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), etc. The Bank adopts various measures thoughtfully, diligently and with compassion to resolve the stressed and bad accounts.
The Bank did sizable investments, both in corporate and retail stressed assets space in FY 2024-25 and expects a lot of opportunities in the acquisition side, especially in retail stressed loans segment as well as large corporate loans, in the coming years. If the prices offered are reasonable and attractive, the Bank shall be open to acquire several of such assets, after critical analysis and evaluation.
GIFT CITY
The GIFT City branch commenced operations in FY 2016-17. The GIFT Branch caters to various banking needs for overseas, IFSC and domestic customers – including term and trade loans, deposits and managing their currency and interest rate risks. In addition, the branch caters to the requirements of the Exchanges and its members at GIFT IFSC acting as a clearing banker. The branch has also started offering global custody services to its customers.
The branch is regulated by International Financial Services Centres Authority (IFSCA), a unified regulator at GIFT IFSC, which provides regulatory oversight and fosters ease of doing business at IFSC.
The Branch operates with defined governance, administrative and functional framework. The Branch has carefully curated a portfolio spread from short- and long-term trade loans, working capital and long-term client loans, investments in bonds, deposits and borrowings, leading to continued growth in profitability, while maintaining high standards of controls and governance. Additionally, the branch is actively improving upon its technology platforms to enhance client experience including net banking and digital journey. The Branch is also actively working on extending its product bouquet and client reach.
DIFC BRANCH
The Bank?s branch at Dubai International Financial Centre ("DIFC"), Dubai, United Arab Emirates, started operations in October 2019. The DIFC Branch is authorised by the Dubai Financial Services Authority (DFSA) as a Category 1 licensed entity, enabling it to accept deposits from eligible clients and provide loans to professional clients (individuals and corporates who qualify as per DFSA rules). The DIFC Branch complements the Bank with its ability to advise and arrange global investment products to its clients through its reach and relationships with various manufacturers of investment and wealth products.
SUBSIDIARIES HIGHLIGHTS
KOTAK MAHINDRA PRIME LIMITED
Kotak Mahindra Prime Limited ("KMPL") offers finance options to retail consumers for passenger cars, multi-utility vehicles and two-wheelers. Provides end-to-end financing solutions through a single window to auto dealers for their working capital and infrastructure creation requirements in the form of inventory funding and term loans. The Company also provides LAP to retail consumers for their business and personal needs.
Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Net Interest Income | 2,133.42 | 1,870.39 |
| Other Income | 686.35 | 499.95 |
| Total Income | 2,819.77 | 2,370.34 |
| Operating Expenses | 1,123.38 | 999.75 |
| Provisions (Net) | 339.53 | 182.23 |
| PBT | 1,356.86 | 1,188.36 |
| PAT | 1,015.47 | 888.06 |
| Particulars | 31st March, 2025 | 31st March, 2024 |
| Net Customer Assets | 40,122.51 | 34,480.87 |
| - Car, Two-Wheeler and Car Dealers | 33,420.62 | 29,846.56 |
| - LAP | 6,531.37 | 3,822.60 |
| - CRE, Corp and Others | 170.52 | 811.72 |
| RoAA % | 2.44% | 2.53% |
| Capital Adequacy Ratio % | 23.54% | 25.17% |
| Tier I % | 23.07% | 24.62% |
PBT for FY 2024-25 is _ 1,356.86 crore, which is higher than the PBT for FY 2023-24 of _ 1,188.36 crore. Higher AUM resulting in higher NII and Other income. Higher operating cost and credit cost have also offset growth in NII for the year. NIM for FY 2024-25 was 5.24% compared to 5.60% for FY 2023-24. Gross NPA was _ 918.82 crore (2.27% of gross advances) while net NPA was _ 393.97 crore (0.98% of net advances) as on 31st March, 2025.
Business Highlights
The passenger car market in India saw a growth of 1.87% in FY 2024-25. Total Unit Sales of Cars and MUVs was 42.86 lakh in FY 2024-25 compared to 42.07 lakh in FY 2023-24 (source: SIAM/company estimates). The Two-wheeler market in India saw a growth of 9.11% in FY 2024-25. Total Unit Sales of Two Wheelers crossed 196.11 lakh in FY 2024-25 (source: SIAM/company estimates).
Need for personal mobility, investments in infrastructure by the government and improved supply situation has resulted in higher demand for vehicles in India. To leverage the growing demand for vehicles, KMPL continues to focus on expanding its operations and invest in new technologies, without losing its focus on portfolio quality. Wide branch network and a firm commitment to deliver superior customer service is helping KMPL to maintain its market position. KMPL is focusing on capitalizing its distribution strength with original equipment manufacturers, Dealers, Channel partners and customers.
Leveraging technology to drive customer value and strengthening compliance
KMPL leveraged advanced technologies to enhance operational efficiency, customer experience and compliance. Key initiatives included deploying Aadhaar-based eKYC with facial recognition to reduce impersonation risks, utilizing data analytics for deeper customer insights and implementing a cloud-based compliance platform integrated with audit management tools to streamline risk monitoring. Additionally, KMPL launched a loan origination platform for its Loan Against Property segment, significantly reducing turnaround time for loan processing.
KOTAK MAHINDRA INVESTMENTS LIMITED
Kotak Mahindra Investments Limited ("KMIL") is primarily engaged in real estate developer finance, corporate loans and other activities such as holding long-term strategic investments.
Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Net Interest Income | 606.85 | 608.36 |
| Other Income | 188.00 | 158.68 |
| Total Income | 794.85 | 767.04 |
| Operating Expenses | 94.29 | 82.06 |
| Provisions (Net) | 26.05 | (5.53) |
| PBT | 674.51 | 690.51 |
| PAT | 501.25 | 514.21 |
| Particulars | 31st March, 2025 | 31st March, 2024 |
| Net Customer Assets | 10,494.40 | 12,449.83 |
| RoAA % | 3.68% | 3.87% |
| Capital Adequacy Ratio % | 36.71% | 27.41% |
| Tier I % | 35.98% | 26.46% |
PBT for FY 2024-25 at _ 674.51 crore was lower than _ 690.51 crore for FY 2023-24, primarily due to NPA provisions, decrease in processing fees, increase in operating cost offset by increase in IPO income and reversal of standard asset provision.
Net Customer assets decreased to _ 10,494.40 crore as on 31st March, 2025 as compared to _ 12,449.83 crore as on 31st March, 2024. This was primarily due to the strong performance of the underlying borrowers especially the real estate developers. PAT decreased by 2.52% to _ 501.25 crore for FY 2024-25 from _ 514.21 crore in FY 2023-24. NIM for FY 2024-25 was 4.82%.
Gross NPA and Net NPA as on 31st March, 2025 was at _ 59.61 crore (0.59% of Advances) and _ 14.14 crore (0.14% of Advances) respectively.
Business Highlights
Real Estate: KMIL?s Real Estate finance team offers real estate finance platforms in the country with expertise across all key asset classes. From structuring complex transactions to broadening the access to capital, its comprehensive financing solutions have made it a leading choice for real estate developers. Given the depth of its coverage, KMIL is able to capture the growth opportunities offered by the all-round growth in the market (especially, residential) across major cities. KMIL has been able to balance growth aspirations without compromising on its credit standards. The asset quality has remained robust through FY 2024-25. KMIL continues to be judicious about the real estate developers that it works with and remains confident of the quality of the lending book.
Corporate Lending: KMIL is focusing on increasing its Corporate Lending book. The landscape of corporate lending is evolving, driven by the diverse needs of mid- and large corporates. KMIL?s approach in this segment is largely sector agnostic (our exposure is across industries ranging from consumer goods, confectionary retailing, steel and hotels), with two sub-segments being among specifically looked at, i.e., education and mid-sized NBFC segment. All round improvement seen across industries offers significant opportunities for growing wholesale book as companies look to refinance their debt and expand. KMIL is well-positioned to harness opportunities that are available in the current economic environment. Going forward, a customer-centric approach coupled with agility will be paramount in driving continued success and delivering meaningful solution in the corporate lending space.
KOTAK INFRASTRUCTURE DEBT FUND LIMITED
Kotak Infrastructure Debt Fund Limited ("KIDFL") is an Infrastructure Debt Fund, set up under the NBFC route. It is engaged in providing finance for infrastructure projects, with more than one year of satisfactory operational history.
During the year, KIDFL forged strong relationships with multiple infrastructure clients. It continues to be judicious about credit underwriting and selection of customers.
Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Net Interest Income | 47.55 | 38.05 |
| Other Income | 16.33 | 16.34 |
| Total Income | 63.88 | 54.39 |
| Total Expenses including Provisions | 10.97 | 10.99 |
| PBT | 52.91 | 43.40 |
| PAT | 53.20 | 43.40 |
Customer Assets increased by 20% to _ 1,561.76 crore as on 31st March, 2025 compared to _ 1,305.78 crore as on 31st March, 2024 mainly due to higher disbursement.
KOTAK SECURITIES LIMITED
Kotak Securities Limited ("KSL") is one of the largest brokerage and distribution houses in India. KSL provides securities broking services in equity cash and derivative segment, commodity, debt and currency derivatives segment, depository and primary market distribution services. KSL is a trading member of BSE Limited, National Stock Exchange of India Limited, National Commodity and Derivatives Exchange Limited, Multi Commodity Exchange Limited and Metropolitan Stock Exchange of India Limited (applied for surrender) and clearing member of clearing corporations NSE Clearing Limited and Indian Clearing Corporation Limited. KSL is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) and repository participant with CDSL Commodity Repository Limited and National e-Repository Limited.
KSL is also registered as a portfolio manager and a research analyst with Securities and Exchange Board of India. Further, KSL is registered as Mutual Fund Distributor with Association of Mutual Funds in India. KSL is having a composite license issued by the IRDAI and also acts as Corporate Agent of Kotak Mahindra Life Insurance Company Limited and Zurich Kotak General Insurance Company (India) Limited (Formerly known as Kotak Mahindra General Insurance Company Limited).
Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Total Income | 5,348.40 | 3,981.57 |
| Total Expenses | 3,173.17 | 2,346.39 |
| PBT | 2,175.23 | 1,635.18 |
| PAT | 1,640.46 | 1,226.17 |
PAT for FY 2024-25 at _ 1,640.46 crore is higher than _ 1,226.17 crore for FY 2023-24, driven by higher brokerage and interest income pursuant to higher market volumes.
Business Highlights
FY 2024-25 witnessed market volume growth in equity cash segment with average daily volumes (excluding proprietary segment) increasing to _ 78,015 crore in FY 2024-25 from _ 56,866 crore in the previous financial year and equity derivative segment increasing to _ 140,724 crore in FY 2024-25 from _ 105,035 crore in previous financial year. Consequently, KSL?s volumes also increased for equity cash and derivative segments.
As on 31st March, 2025, KSL had a national footprint of 1,143 branches and franchisees across 309 cities in India serving its customers. Kotak Securities? market share (excluding proprietary segment) for FY 2024-25 was:
12.86% compared to 12.63% in FY 2023-24 for the equity derivatives segment*
9.38% compared to 10.24% in FY 2023-24 for the equity segment
In November 2024, the company revised pricing for its digital plans (Trade Free Plans) with _ 10 per order brokerage on equity intraday and F&O trades, offering one of the most attractive propositions for traders in the industry.
The digital plans collectively accounted for 61% of overall KSL acquisition in FY 2024-25. Due to the continued thrust on digital, the Kotak Neo mobile trading application of KSL registered a massive adoption, resulting in 44% YoY growth in the trading volume* through the Kotak Securities Mobile apps.
*Based on notional turnover for futures of all segments and premium turnover for options of all segments
Multiple initiatives were adopted to improve KSL value proposition. Key product initiatives are mentioned below:
Revamped Neo App Homepage to enable personalised views for Stocks, F&O and Mutual Funds to improve discovery.
Revamped Demat account opening journey, enabling a native experience with seamless flow for the users – helped KSL grow acquisition by 30% YoY.
Enhanced transparency through a detailed breakdown of used margin across Equity, Derivatives and Margin Trading Facility (MTF).
Launched Pay Later (MTF) Research Section including featured curated stock recommendations from in-house research team.
Simplified Pay Later (MTF) investing by instant activation, easy cash withdrawal and MTF to Cash conversion of positions.
Launched Trade from Charts with seamless in-chart order placement, P&L tracking and order management.
Launched Strategy Bot to automate trade execution with advanced risk management capabilities.
Enhanced its derivatives trading experience by revamping the advanced basket order feature, introducing an Options Screener for faster trade discovery and enabling Greeks directly on the Option Chain for deeper trading insights.
Embedded CSAT surveys and in-app feedback mechanisms to continuously capture user insights and proactively enhance the customer experience.
Added Corporate Actions Labels on stocks for better decision-making and Good Till Triggered (GTT) orders to ensure no missed opportunities.
Introduced same-day 100% margin credit for shares sold enabling the customers to reinvest or utilize funds instantly.
Rolled out a simplified, native IPO application journey for smoother experience.
Stockcase and SIPIT products launched in FY 2023-24, achieved significant growth with a robust six-times increase in basket investments sold per month for FY 2024-25 compared to MarcRs. 2024 and three-times YoY increase in SIPs processed per month for FY 2024-25 compared to MarcRs. 2024. Enabled one-click order form and UPI Autopay for seamless order execution and instant SIP setups.
Introduced UPI Block Facility (ASBA) for the secondary market, allowing seamless, real-time fund blocking and enhanced payment efficiency for stock purchases.
Chatbot and IVR Enhancements: Launched NLP, driving a notable increase in self-service adoption — from 18% in April 2024 to 33% by MarcRs. 2025.
Launched native Offer for Sale (OFS) and Buyback processes to simplify participation, driving higher engagement and improved user experience.
Revamped dormant account reactivation with a fully digital process, eliminating the need for self-recorded videos or branch visits to deliver a seamless customer experience.
Participated in the Series B funding round of deep-tech star-tup, Vunet, a business journey observability platform that enables financial services firms to gain real-time visibility into critical processes
Key marketing updates are mentioned below:
Launched brand campaign "Jo Tez Hain, Woh Aage Hain" featuring a series of TVCs that resonated with young audiences through relatable, fast-paced narratives. The campaign reach was 62.8 million, with a 10% uplift in brand consideration metrics.
Content Marketing Initiatives: To educate and engage investors, KSL launched a strategic content marketing and social media plan, witRs. 12 new IPs with content-focused on awareness and edutainment. They reached 49.9 million views and 2.1 million engagements. YoY community growth: YouTube subscribers rose 275%.
Awards won in FY 2024-25:
ASSOCHAM Awards - Best marketing campaign Mar-24
Best Use of Data Analytics in Marketing Nov-24
2nd Annual NBFC & Fintech excellence awards - Best Analytics driven project Aug-24
Finnoviti Award by Banking Frontiers – Digital Transformation with Kotak NEO Jun-24
Best Customer experience transformation - Krypton Innovation Summit Dec-24
Most Effective Marketing Campaign - Online Trading Platform Pitch BFSI Marketing Awards 2023 Oct-24
The Institutional Equities division of KSL, in FY 2024-25, registered the highest-ever growth in revenues and maintained its leadership position in both the cash equities and derivatives segments. In FY 2024-25, overall market volumes in the institutional segment increased by 46% YoY for the cash segment and by 24% YoY for the derivatives segment. Kotak Institutional Equities saw significant growth in revenues YoY and was able to maintain its yields across client segments. It continued to add new clients to its franchise. It was able to maintain its leadership position in the distribution of IPOs, QIPs, open offers and the execution of block trades.
The division has been investing significantly in upgrading its IT infrastructure to offer a superior trading experience to its clients and improve operational efficiency. The Institutional Equities research team continued to add new sectors and companies. It now covers more than 85% of the market capitalisation of the NSE.
KOTAK MAHINDRA CAPITAL COMPANY LIMITED
Kotak Mahindra Capital Company Limited ("KMCC") is a leading, full-service investment bank in India, offering integrated solutions encompassing high-quality financial advisory services and financing solutions. The services include Equity Capital Market issuances, M&A Advisory and Private Equity Advisory.
Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Total Income | 669.16 | 431.68 |
| Total Expenses | 208.63 | 154.99 |
| PBT | 460.53 | 276.69 |
| PAT | 360.63 | 215.01 |
Business Highlights Equity Capital Markets
FY 2024-25 was a stellar year for Indian Equity Capital Markets, with the highest-ever activity across all the product categories, viz., IPOs, follow-on primary raises via QIPs and sell-downs. Indian Equity Capital Markets hit all-time highs in FY 2024-25, led by strong FII and DII inflows in RS.1FY25. While FIIs turned net sellers (USD 15.6 billion) by the end of FY 2024-25, record DII inflows of USD 71.6 billion sustained market momentum. This reflects growing market resilience and strong domestic fundamentals. A total of _ 386,469 crore (versus _ 209,746 crore in FY 2023- 24, up 184% YoY) was raised in FY 2024-25 across primary market deals, i.e., Initial Public Offerings (IPOs), Qualified Institutional Placements (QIPs), Further Public Offering (FPO) and Rights Issues. All sectors saw capital market deals being executed on the back of strong investor response.
KMCC was ranked No. 1 in Equity Capital Markets for third year in a row (Source: Bloomberg) and continued to be the Left Lead Banker of Choice, having led marquee transactions such as Hyundai Motor India, Swiggy, Hexaware, Vishal Megamart, Bajaj Housing Finance, Ola Electric, Brainbees (Firstcry), Sai Life Sciences, Dr. Agarwal?s Healthcare, Premier Energies, Emcure Pharmaceuticals and Indegene.
KMCC successfully completed several transactions, including 18 IPOs, 12 QIPs and 1 Rights Issue raising a total of _ 143,571 crore in FY 2024-25. Kotak led several marquee transactions such as largest ever IPO in history of Indian Capital Markets of Hyundai Motor India - _ 27,859 crore, first IPO to successfully list via confidential filing route of Swiggy - _ 11,327 crore, the largest ever IT services IPO in India and the largest IT services IPO globally in the last 10 years of Hexaware Technologies - _ 8,750 crore, India?s first pureplay Electric Vehicle IPO of Ola Electric Mobility - _ 6,146 crore, combined QIP of Equity and CCD through a single document for Samvardhana Motherson International - _ 6,438 crore.
Top Equity Deals that were concluded by KMCC during the year include:
IPO: Hyundai Motor India - _ 27,859 crore, Swiggy - _ 11,327 crore, Hexaware Technologies - _ 8,750 crore, Vishal Mega Mart - _ 8,000 crore, Bajaj Housing Finance - _ 6,560 crore, Ola Electric Mobility - _ 6,146 crore, International Gemmological Institute - _ 4,225 crore, Brainbees Solutions - _ 4,194 crore, Sai Life Sciences - _ 3,043 crore, Dr.Agarwals Health Care - _ 3,027 crore, Aadhar Housing Finance - _ 3,000 crore, Acme Solar Holdings - _ 2,900 crore, Premier Energies - _ 2,830 crore, Niva Bupa Health Insurance Co. - _ 2,200 crore, Emcure Pharmaceuticals - _ 1,952 crore, Indegene - _ 1,842 crore, Ventive Hospitality - _ 1,600 crore, Western Carriers - _ 493 crore
QIP: Varun Beverages Ltd. - _ 7,500 crore, Godrej Properties Ltd. - _ 6,000 crore, Prestige Estates Projects Ltd. - _ 5,000 crore, Samvardhana Motherson International Ltd. - _ 6,438 crore, Torrent Power Ltd. - _ 3,500 crore, Brookfield India Real Estate Trust - _ 3,500 crore, Mankind Pharma Ltd. - _ 3,000 crore, Bharat Forge Ltd. - _ 1,650 crore, Brigade Enterprises Ltd. - _ 1,500 crore, Gravita India Ltd. - _ 1,000 crore, Keystone Realtors Ltd. - _ 800 crore, Cello World Ltd. - _ 737 crore
Rights: Tata Consumer Products – _ 2,998 crore
Mergers and Acquisitions and Private Equity Advisory
The total M&A Advisory deal value in India for FY 2024-25 increased to ~USD 109 billion from ~USD 87 billion in FY 2023-24, while deal volumes increased to 3,446 in FY 2024-25 from 2,787 in FY 2023-24. The average deal size for FY 2024-25 decreased marginally to USD 47 million vis-?-vis USD 49 million in FY 2023- 24. (Source: Bloomberg, as on 28th April, 2025)
Deal values in FY 2024-25 showed a strong growth of ~26% compared with the previous year. In FY 2024-25, financial sponsors accounted for ~40% of the transactions by value versus ~31% in FY 2023-24 and continued to constitute a significant part of India?s M&A activity.
The deal activity during FY 2024-25 was largely contributed by domestic majority, inbound minority investments, outbound acquisitions in the media, technology, healthcare, consumer sectors, financial services and infrastructure. Consolidation by market leaders and sponsor buy-outs, creation of business platforms by consolidating multiple businesses and simplification of corporate structure were major drivers for M&A transactions in FY 2024-25 and the trend is expected to continue in FY 2025-26. Other factors such as building adjacencies by the acquisition of new business, business consolidation and exits by private equity funds are also expected to drive the M&A activity in FY 2025-26.
In FY 2024-25, among the investment banks, KMCC was ranked #1 by value of deals and #2 by volume of deals in the M&A league tables (Source: Bloomberg, as on 28th April, 2025). KMCC advised on a diverse array of 11 M&A transactions across a range of products and sectors, for a total deal value of ~USD 7 billion (not considering deals where values have not been disclosed):
Across products, ranging from acquisitions, divestments, mergers, restructurings, private equity investments;
Across sectors, ranging from healthcare, financial services, consumer, digital, infrastructure and auto and industrials Some of the key advisory deals that were advised by KMCC during the financial year include:
Sell-side advisor to Kogta Financial (India) Ltd for Series E Fundraise from Ontario Teachers? Pension Plan
Sell-side advisor to TI Clean Mobility Pvt Ltd for fundraise GEF Capital Partners and M&G Investment Management
Sell-side advisor to the Fortum Corporation for sale of 185 MW Indian Solar Portfolio to Gentari Renewables Pte.
Buy-side advisor to Bain Capital for the acquisition of joint control in Manappuram Finance Ltd and manager to the open offer
Buy-side advisor to Carlyle for acquisition of Roop Automotives Ltd and Highway Industries Ltd for creation of diversified global auto components platform
Financial advisor and Fairness Opinion provider to Zomato Ltd for acquisition of the movie and events ticketing business of Paytm
Advisor to Aster DM Healthcare Ltd on merger of Quality Care India Ltd with Aster DM Healthcare Ltd
Financial advisor to Adi and Nadir Godrej family for family settlement and re-alignment of holdings in Godrej group companies
Financial advisor and Fairness Opinion provider to Hindustan Unilever Ltd for the demerger of the ice cream business
Manager to the open offer in HealthCare Global Enterprises Ltd by KKR
KOTAK MAHINDRA LIFE INSURANCE COMPANY LIMITED
Kotak Mahindra Life Insurance Company Limited ("KLI") is in the business of Life Insurance, annuity and providing employee benefit products to its individual and group clientele. KLI has developed a multi-channel distribution network to cater to its customers and markets through agency, bancassurance and other alternate, group and online channels on a pan-India basis.
Network
KLI had 323 life insurance outlets across 153 locations. KLI has 114,436 life advisors, 26 Bancassurance partners and 292 brokers and corporate agency tie-ups.
Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Gross Premium Income | 18,375.67 | 17,708.38 |
| First Year Premium (Incl. Group and Single) | 8,214.38 | 8,656.85 |
| Profit Before Tax – Shareholders? Account | 1,174.99 | 1,041.24 |
| Profit after Tax – Shareholders? Account | 769.47 | 688.62 |
| Solvency Ratio (as on 31st March) | 2.45 | 2.56 |
The Indian Embedded Value (IEV) was _ 17,612 crore (31st March, 2024: _ 15,242 crore) as on 31st March, 2025, up 15.6% YoY. This is computed based on the principles prescribed by APS10. The methodology, assumptions and results have been reviewed by Willis Towers Watson Actuarial Advisory LLP.
The Value of New Business (VNB) for FY 2024-25 stood at _ 959 crore (FY 2023-24: _ 1,053 crore) and the VNB margin was 25.0%. The Net worth of KLI increased by 9.21% to _ 6,403.07 crore as on 31st March, 2025 from _ 5,863.23 crore as on 31st March, 2024. PBT (Shareholders) of KLI for FY 2024-25 stood at _ 1,174.99 crore against _ 1,041.24 crore in FY 2023-24.
KLI has announced a bonus of _ 1,178.09 crore for FY 2024-25, a growth of 16.98% over previous year, pertaining to more than 7 lakh eligible policyholders. This is the 24th consecutive year that Kotak life has declared a bonus on participating products.
An insurance company is considered to be solvent if its assets are adequate and liquid to pay off claims/liabilities as and when they arise. Solvency ratio indicates the Company?s claim/liability paying ability. KLI has solvency ratio of 2.45 against a regulatory requirement of 1.50.
KLI saw an increase in its AUM (including shareholders?) by 14.55% YoY to _ 91,806.85 crore in FY 2024- 25.
KLI has been assigned Crisil Corporate Credit rating of CRISIL AAA/Stable (Pronounced as Crisil triple A rating with Stable outlook)
Business Highlights Revenue Performance
KLI?s summary of premiums is as under
| Particulars | FY 2024-25 | FY 2023-24 |
| Individual Regular | 2,861.30 | 2,663.06 |
| Individual Single | 1,232.13 | 1,597.10 |
| Group Premium | 4,120.95 | 4,396.69 |
| Total New Business Premium | 8,214.38 | 8,656.85 |
| Renewal | 10,161.29 | 9,051.53 |
| Gross Premium | 18,375.67 | 17,708.38 |
Distribution Mix (Individual business APE (Single 1/10))
The distribution mix for Individual business APE (Single 1/10), is 48.98% for the Bancassurance channel and 51.02% for Agency & other channels.
Individual New business regular premium Product Mix
This year product mix of KLI in individual regular premium continues to be driven largely by Traditional business being at 72.64% and ULIP at 27.36%.
Protection Share
Protection share, as a percentage of Individual New Business and Total Group Business, stood at 32.83%. Overall protection business for FY 2024-25 stood at _ 2,804.93 crore.
The total sum assured as on 31st March, 2025 stood at _ 1,556.92 (‘000 crore), an increase of 8.02% YoY.
Group Business
The group business comprising of Group term, Group Credit life business and Group Fund business (Including renewals) stood at _ 4,449.94 crore in FY 2024-25 (FY 2023-24: _ 4,712.70 crore).
Conservation and Persistency
The Conservation ratio stood at 86.26% in FY 2024-25 compared to 88.09% in FY 2023-24. As on 31st March, 2025, the persistency was 85.23% (13th month), 76.76% (25th month), 67.52% (37th month), 61.41% (49th month) and 56.32% (61st month).
Claims Settlement Ratio
The individual claims settlement ratio for FY 2024-25 improved to 98.61% (FY 2023-24: 98.29%) while the group claims settlement ratio for FY 2024-25 improved to 99.63% (FY 2023-24: 99.23%).
Industry Comparison
On an individual APE Basis (Single 1/10), KLI has registered 5.73% growth against private insurance industry growth of 15.09% and overall industry growth of 10.46%. KLI?s market share for Individual New Business premium (APE terms) is 3.51% for FY 2024-25 among private insurers. This is due to higher proportion of traditional policies compared to industry.
On a group APE Basis (Single 1/10), KLI?s market share for Group New Business premium (APE terms) is 10.67% for FY 2024-25 among private insurers.
In FY 2024-25, the insurance industry as a whole registered 9.39% growth on Total New Business Premium – Adjusted Premium Equivalent (APE) terms (Single 1/10), KLI registered a growth of 4.12% on Total New Business Premium- APE terms. On the same basis, KLI?s market share stood at 4.81% of the private industry.
Kotak Life launched innovative products, offering protection and long-term income. Some significant new launches for the year were:
Kotak Gen2Gen Protect (UIN: 107N132V02): A first-of-its-kind two-generation life cover plan, wherein parents receive coverage with full premium return on survival of the term, after which it seamlessly transfers to their child without additional premiums or medical checks.
Kotak Gen2Gen Income (UIN: 107N163V01): An industry-first plan, which provides parents with regular income until a predetermined age. At maturity, premiums paid are received back in a lump sum. This plan then transfers to the child providing him life cover and an income till the attainment of age 85.
Kotak Confident Retirement Builder (UIN: 107L136V02): A unit-linked pension plan that helps individuals save for retirement through a selection of investment funds, complemented by the launch of the new unit-linked pension plan ‘Kotak Nifty 500 Multicap Momentum Quality 50 Index Pension Fund?.
Kotak Confident Retirement Savings Plan (UIN: 107N162V01): A participating pension plan that builds a retirement corpus while allowing participation in profit of a participating fund of Kotak Mahindra Life Insurance Company.
Information Technology and Digital Initiatives
The dynamic life insurance landscape of FY 2024-25, characterised by evolving customer needs, supportive regulatory reforms, rapid technological advancements and a fluid global environment, underscored the importance of adaptability. In response to swaying market conditions, KLI has brought in critical technology interventions during the financial year.
By prioritising customer-centricity, scale with embedded value, customer-centricity, digital excellence and innovative products, KLI made strategic investments in digital transformation initiatives that are fuelling future growth, productivity gains, reduced cost to premium ratio, market leadership and stakeholder value creation. The following technology and digital initiatives were focused on:
A. Elevate Customer On-boarding and Servicing
Optimus
This is a next generation omni-channel customer onboarding platform that enables an unparalleled customer experience offering configurable product launches and journeys as per channel/partner needs. It is equipped with a unified customer portal facilitating one stop customer convenience of payment, e-mandate setup, pre-issuance verification call and policy declaration.
Digitalised workflow for Group Underwriting (UW)
Group Insurance UW processes have been streamlined and digitalised using an industry-best platform, thereby enhancing efficiency, strengthening governance and improving case visibility from the requirements raised stage to fulfilment along with underwriting decision being systematically captured and synced back with the core systems.
Centralised Communication Management (CCM)
With an objective to unify all customer communications on a single, cloud-based platform, KLI embarked on a journey to replace legacy and disparate communication tools with a robust centralised platform. CCM will provide superior control over communications and give deeper insights on customer interaction.
Policy Loans and ECS-enabled on WhatsApp and Web Channels
Customers can now avail loan against their policy via WhatsApp and the Customer portal (OPM). Customers can also now raise ECS activation request via WhatsApp and Chatbots without any re-directions or manual interventions
B. Catalyse Distributor and Partner Success
Vymo
As part of the Company?s commitment to strengthen distribution capabilities, the Company has partnered with VYMO to launch an activity management module for its agency employees. VYMO provides an industry-leading sales productivity platform that endows distributors with actionable insights, intuitive engagement tools & performance tracking.
Boost 360
A super-app for KLI?s advisors, partners and frontline sales. Boost empowers sales users with cutting edge features such as customer servicing suite, KPI dashboards and increased revenue opportunities. Boost witnessed 98,500+ registered users and 46,400+ monthly active users, facilitating over 2.5 million+ service requests annually.
C. Organisation Capability Additions
Driving Application Value Excellence
As part of the KLI?s strategic focus on Application Value Management (AVM), vital initiatives centred around observability, elimination and automation were undertaken. BOTs were deployed to automate queue re-push and trim manual processes. Enhanced observability frameworks leveraged to gain real-time insights into application performance, enabling data-driven decision-making. Low-value processing steps were eliminated optimising the overall technology ecosystem.
SAP for Investment Management
Automation of the investment front to back activities using SAP has been a state-of-the-art implementation for KLI. The system offers an intuitive UI with a capability of custom reports. The system has proven to be a single source to manage investments across asset classes and adhere to regulatory and internal compliance with superior data capturing, processing and visualisation.
Social and Rural Obligations
Kotak Life continues to focus on financial inclusion by insuring rural and social lives. During FY 2024-25, Kotak Life has taken necessary measures and insured the relevant lives towards achieving the Rural and Social sector obligations emanating from IRDAI (Rural, Social and Motor Third-Party Obligations) Regulations 2024.
Geographical Coverage and Distribution Strength
KLI expanded its footprint witRs. 33 new branches (18 in Tier 2 and 3 cities) and recruited ~66,000 agents. We also secured 2 New Banca partnerships and 14 new CA tie-ups in the Group business. As the appointed lead insurer for Tamil Nadu and Puducherry, KLI reached 20,000+ individuals through rural awareness campaigns.
KOTAK MAHINDRA ASSET MANAGEMENT COMPANY LIMITED AND KOTAK MAHINDRA TRUSTEE COMPANY LIMITED
Kotak Mahindra Asset Management Company Limited ("KMAMC") is the asset manager of Kotak Mahindra Mutual Fund ("KMMF") and Kotak Mahindra Trustee Company Limited ("KMTCL") acts as the trustee to KMMF. KMAMC also acts as a portfolio manager under the portfolio management regulations and an investment manager to an AIF.
Financial Highlights
| Kotak Mahindra Asset Management Company Limited | FY 2024-25 | FY 2023-24 |
| Total Income | 1,508.99 | 941.83 |
| Total Expenses | 473.87 | 371.19 |
| PBT | 1,035.12 | 570.64 |
| PAT | 795.71 | 424.41 |
| KMMF - AAUM | 468,820 | 346,589 |
| Kotak Mahindra Trustee Company Limited | FY 2024-25 | FY 2023-24 |
| Total Income | 239.81 | 140.53 |
| Total Expenses | 4.53 | 5.33 |
| PBT | 235.28 | 135.20 |
| PAT | 180.79 | 100.77 |
Revenue from operations increased to _ 1,302.64 crore in FY 2024-25 from _ 926.37 crore in FY 2023-24, largely on account of an increase in AAUM. The overall costs increased to _ 473.88 crore in FY 2024-25 from _ 371.19 crore in FY 2023-24. The overall PBT increased to _ 1,035.12 crore in FY 2024-25 compared to _ 570.64 crore in FY 2023-24 on account of increase in AAUM and in FY 2024-25 had a mark-to-market capital gain of around _ 139 crore on account of the impact of the alignment of investment policy based on the RBI regulations.
For KMTCL, the increase in PBT is on account of increase in AAUM in FY 2024-25 and a mark-to-market capital gain of around _ 50 crore on account of impact of the alignment of investment policy based RBI regulations.
Business Highlights
The mutual fund industry registered 34.88% YoY growth in FY 2024-25 over FY 2023-24 with the Annual Average Assets under Management (AAUM) for FY 2024-25 standing at _ 66.18 lakh crore.
The AAUM of KMMF stood at _ 468,820 crore for FY 2024-25, up 35.27% from _ 346,589 crore in FY 2023- 24. AAUM Market Share was 7.09% in FY 2024-25 (7.07% FY 2023-24). KMAMC is ranked no. 5 in the industry on the basis of AAUM.
KMAMC has 67.05 lakh unique investors (on the basis of RTA data) against the industry?s 542.49 lakh, a market share of 12.36% in MarcRs. 2025, versus 12.16% in MarcRs. 2024.
KMAMC ended the year with AUM under the portfolio management business of _ 4,504 crore as on 31st March, 2025 versus _ 3,203 as on 31st March, 2024.
In FY 2024-25, KMAMC launched three open ended funds and seventeen passive strategies.
KMAMC is a signatory to UN-PRI and Climate Action 100+.
As of MarcRs. 2025, KMAMC had over 1.31 crore folios, with over 21 lakh new folios added in FY 2024-25. KMAMC had a robust distribution network with over 99,341 empanelled distributors and 106 branches spread across 94 cities.
Kotak Mutual Fund Marketing Campaign - Investor Awareness Program:
The campaign "Sapno Ko Skip Nahi, SIP Karo" was focused on raising awareness and educating people about how Systematic Investment Plans (SIPs) can help achieve financial dreams. Through social media, the Company reached beyond 257 million people and the company website saw more than 22 lakh visits, showing strong engagement. This campaign has successfully spread awareness, empowering individuals to take charge of their financial future through SIPs.
Campaign Films:
https://youtu.be/XiT_T7SlCzU https://youtu.be/Ocq9binpcHY https://youtu.be/fQoQyqpxRm0
List of awards won in FY 2024-25 for this campaign - "Sapno Ko Skip Nahi, SIP Karo"
E4M Maddies 2024 - Most Engaging Mobile campaign
E4M Pitch BFSI Marketing Awards - Most Effective Use of OTT / Digital
Mobexx - Excellence in data-driven social media marketing
Mobexx - Excellence in data-driven content marketing
Finixx Awards - Mobile advertising excellence in launch campaign
Datamatixx - Most Effective Use of OTT / Digital
Digies 2025 - Best Programmatic Campaign
KOTAK MAHINDRA PENSION FUND LIMITED Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Total Income | 10.25 | 6.38 |
| Total Expenses | 8.32 | 6.59 |
| PBT | 1.93 | (0.21) |
| PAT | 1.93 | (0.21) |
| AUM | 6,378 | 4,706 |
Kotak Mahindra Pension Fund Limited ("KMPFL") manages nine schemes under the National Pension System. It had total assets under management (AUM) of _ 6,378 crore as at 31st March, 2025, up 36% from _ 4,706 crore as on 31st MarcRs. 2024. KMPFL?s equity fund (NPS Tier 1) was among the top two best-performing equity funds in the NPS industry (NPS Tier 1) over one and three year period as on MarcRs. 31, 2025.
Revenue from operations increased to _ 5.07 crore in FY 2024-25 from _ 3.25 crore in FY 2023-24, on account of the increase in AAUM. The overall costs had increase to _ 8.33 crore in FY 2024-25 from _ 6.59 crore in FY 2023-24. The overall PBT increased to _ 1.93 crore in FY 2024-25 compared to loss of _ 0.21 crore in FY 2023-24, majorly on account of a mark to market capital gain of around _ 4.18 crore in FY 2024-25 due to the impact of the alignment of investment policy based on the RBI regulations.
KOTAK ALTERNATE ASSET MANAGERS LIMITED
(Formerly known as Kotak Investment Advisors Limited)
Kotak Alternate Asset Managers Limited ("KAAML") is one of Indias leading alternate asset management firms, offering investment management and advisory services across a diverse range of asset classes. As of 31st March, 2025, KAAML has raised approximately USD 11 billion in capital commitments since inception.
Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Total Income | 583.95 | 413.12 |
| Total Expenses | 404.31 | 336.25 |
| PBT | 179.65 | 76.87 |
| PAT | 139.31 | 58.84 |
Business Highlights
KAAMLs offerings are segmented into four core strategies:
Real Estate: This includes investment offerings in RE Credit and RE Equity which invest across Commercial Real Estate, Data Centres and Warehousing. The platform leverages macro tailwinds such as the growth of digital infrastructure, e-commerce expansion and regulatory enablers. Investments are structured to integrate global best practices in sustainability, operational efficiency and technology adoption.
Private Credit: KAAMLs private credit business offers customised capital solutions in special situations, performing and infrastructure credit. Notable funds include:
Kotak Strategic Situations Fund (KSSF): Focuses on value-accretive opportunities in complex scenarios, such as restructurings, turnarounds and bespoke structured transactions.
Kotak Private Credit Fund: Targets mid-market lending, providing structured credit to fundamentally sound businesses seeking bespoke capital solutions.
Kotak Infrastructure Investment Fund: Indias first dedicated infrastructure credit fund, deploying capital into operating assets across traditional and emerging infrastructure sectors.
Private Equity: Kotak Private Equity has been active in Indias private equity landscape since 2005, focusing on long-term thematic investing and specializing in healthcare and life sciences. During the year, KAAML launched Kotak Life Science Fund (KLSF-I), achieving a first close of approximately _250 crore which intends to invest across early to growth stage ventures aligned with Indias expanding healthcare and biotech ecosystem.
Discretionary Solutions: This platform offers bespoke investment solutions which include Kotak Iconic (complete Equity Portfolio Solutions) and Kotak Optimus (Multi-Asset, Multi-Strategy Portfolio Solution) suited for Ultra High Net Worth Individuals (UHNIs) and Family Offices. The platform marked a significant milestone with the launch of Iconic II in the current FY 2024-25, following the success of its predecessor. The platform crossed a critical AUM milestone of _ 6,306 crore, reflecting growing investor confidence and sustained interest in personalised, multi-asset allocation solutions.
In FY 2024-25, KAAML attracted new capital commitments ~ _ 12,200 crore across its various funds and strategies, showing a growth rate of 15% w.r.t FY 2023-24.
The key highlights of investments made by KAAML during the FY 2024-25 are as follows:
_ 400 crore in Biorad Medisys Private Limited (Biorad Medisys)
_ 1,445 crore for the acquisition of API business of Viatris by Matrix Pharma
_ 940 crore in Neuberg Diagnostics Private Limited ("Neuberg") to support Neuberg?s inorganic expansion strategy.
_ 1,050 crore in Tirupati Medicare Limited ("Tirupati"). This investment will facilitate a complete exit for the existing investor and support Tirupatis expansion plans.
Kotak Bespoke Investment Advisory Business:
As a SEBI-registered investment advisor, KAAML prides itself on providing advice which is tailored to meet the specific needs and goals of each client and is built on the tenets of asset allocation. The advisory proposition is focused on dedicated advice based on client-specific investment objectives, preferences and tailored solutions based on the risk profile of the client.
During the current year, the investment advisory practice crossed _ 120,000 crore of assets under advice, across 460+ families. During the year, KAAML has secured investment advisory mandates from clients based out of a number of tier 3 cities across the length and breadth of India. "Kotak Selekt", KAAML?s investment advisory offering, has crossed _ 800 crores of assets under advice.
Kotak Cherry Platform
KAAML owns and runs a 100% digital investment ecosystem under the brand name of ‘Cherry?. It was an exciting year for Kotak Cherry as the one stop investment platform grew many manifolds during financial year.
Kotak Cherry brought in many new features to drive this growth.
Cherry now provides an in-depth analysis of customer?s portfolio with Portfolio Analyser
An assisted portal was created to enable front end and call centre teams to assist customers in managing their investments
Cherry launched Aspire SIP, a unique proposition comprising of combined benefits of SIPs and SWPs
Cherry became the Technology Centre of Excellence for mutual funds launching mutual fund proposition on Kotak811 app and new Kotak Mobile Banking app
Cherry brought in in-app selling with native marketing properties to drive business
Caf? and Stories, an edutainment feature was revamped to drive trust build up with customers
While the focus has been on growing the Platform, impetus has been put to strengthen technology to support multi-fold growth. This has been done by revamping and rewriting existing code base to internalise entire technology by removing vendor dependency for all key services.
The launch of such variety of features and branding initiatives led to Cherry platform seeing significant growth through the year both with customers and AUM.
KOTAK MAHINDRA TRUSTEESHIP SERVICES LIMITED
Kotak Mahindra Trusteeship Services Limited ("KMTSL"), acts as a trustee to domestic venture capital funds, alternate investment funds. KMTSL also offers Kotaks Estate Planning Services and with a legacy of nearly two decades in this field, KMTSL has been instrumental in setting up private family trusts for many families across India, catering to a diverse mix of industries and sectors. KMTSL also acts as a trustee to estate planning trusts, assisting in the administration and management of the trusts in a seamless manner over a longer period of time.
Kotaks Estate Planning Services plays an important role in providing a comprehensive platform for succession planning for Ultra High Net Worth Individual (UHNI) and High Net Worth Individual (HNI) clients, comprising of entrepreneurs, business families and professionals, who may have connections in multiple jurisdictions as families grow more global over time. The Company helps families plan intergenerational transfer of their family wealth in a streamlined and planned manner. This business aims at assisting families with their succession planning needs to build a long-lasting and meaningful relationship that span more than just one generation.
Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Total Income | 20.37 | 19.45 |
| Total Expenses | 12.57 | 11.77 |
| PBT | 7.80 | 7.68 |
| PAT | 5.84 | 5.87 |
Estate Planning Business
The Estate Planning business of KMTSL is primarily engaged in assisting families setting up private family trusts and rendering trusteeship services to private trusts set up for clients. During FY 2024-25, the Estate Planning business achieved a top-line growth of ~9%. Business growth has been due to increase in client interactions and greater interest of families in succession planning.
This business segment continues to witness new entrants, viz., wealth management outfits, CA firms, private client practice started by many law firms, offshore trustee companies targeting HNI clients in India, leading to pricing pressure and increased competition. As on 31st March, 2025, KMTSL has aggregate assets under trusteeship of approximately _ 51,000 crore.
Trusteeship Services for Alternative Investment Funds
KMTSL also acts as a trustee to 14 alternative investment funds and venture capital funds. The investment manager of funds for which the KMTSL acts as Trustee, has adopted comprehensive risk management process and procedures.
INTERNATIONAL SUBSIDIARIES
International subsidiaries consist of following entities:
1. Kotak Mahindra (UK) Limited
2. Kotak Mahindra (International) Limited
3. Kotak Mahindra, Inc.
4. Kotak Mahindra Asset Management (Singapore) Pte. Limited
5. Kotak Mahindra Financial Services Limited
The international subsidiaries have offices in Singapore, the UK, Mauritius, the US and the UAE.
The international subsidiaries are mainly engaged in investment management, advisory services, dealing in securities, broker-dealer activities and investments on own accounts.
The funds managed or advised by the International Subsidiaries are India centric equity and debt funds and target investors from across the globe seeking to invest into India.
Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Total Income | 540.20 | 434.73 |
| Total Expenses | 245.74 | 214.99 |
| PBT | 294.46 | 219.74 |
| PAT | 254.98 | 188.72 |
The total income earned by international subsidiaries increased from _ 434.73 crore in FY 2023-24 to _ 540.20 crore in FY 2024-25.
The higher income from investment management (largely due to higher AAUM as mentioned above), advisory and other services (_ 81.11 crore) and income from investments (including mark-to-market gains) (_ 31.65 crore) were offset by lower income from dealing in securities (_ 3.50 crore). The overall expenses increased from _ 214.99 crore during the previous year to _ 245.74 crore during the current year, primarily on account of higher staff costs and other operating expenses. Resultantly, the profit before tax for the year stood at _ 294.46 crore versus a profit of _ 219.74 crore for the previous year.
Business Highlights
The closing assets managed/advised (AUM) by the International Subsidiaries decreased from USD 6.19 billion (_ 51,653.61 crore) as on 31st March, 2024 to USD 5.51 billion (_ 47,112.14 crore) as on 31st March, 2025. This was primarily on account of net outflows from funds, partially offset by positive market movement in capital markets in India. However, the average AUM (AAUM) increased from USD 5.47 billion (_ 45,317.06 crore) for FY 2023-24 to USD 6.37 billion (_ 53,903.61 crore) for FY 2024-25.
Income from bond dealing business remained subdued in FY 2024-25 due to lower volumes and spread in the market. KMUK intends to close this business during the upcoming financial year in light of the difficulties it has had in scaling up the same.
BSS MICROFINANCE LIMITED
BSS Microfinance Limited ("BSS") is a wholly owned subsidiary of KMBL and working as Business Correspondent ("BC") of the Bank. BSS facilitates microcredit loans to rural and semi-urban poor women. It has 878 branch offices across 13 states in India. Loans originated by BSS are eligible for priority sector advances of the Bank.
Financial Highlights
(_ in crore)
| Particulars | FY 2024-25 | FY 2023-24 |
| Total Income | 858.28 | 996.07 |
| Total Expenses | 957.61 | 487.03 |
| PBT | (99.34) | 509.04 |
| PAT | (73.67) | 383.22 |
The microfinance industry is currently experiencing heightened financial stress, largely driven by higher borrower indebtedness. Profitability in the sector is under pressure due to rising credit costs and operational expenses. Growth in assets under management (AUM) is expected to decelerate as a result of operational disruptions and excessive borrower leverage. BSS?s disbursements reduced to _ 3,959.86 crore in FY 2024-25 from _ 8,213.32 crore in FY 2023-24. Further, entity made a loss of _ 73.67 crores in FY 2024-25 as against a profit of _ 383.22 crores in FY 2023-24.
SONATA FINANCE PRIVATE LIMITED
Sonata Finance Private Limited ("Sonata") was acquired by the Bank on 28th March, 2024 for a total consideration of _ 537.12 crore. Sonata Finance Private Limited voluntarily surrendered its the RBI Certificate of Registration (CoR) for Non-Banking Financial Institution (NBFI) business, which was subsequently cancelled by the Reserve Bank of India (RBI), effective 8th October, 2024. Sonata now functions as a Business Correspondent (BC) for the Bank which is primarily focused on extending microcredit loans to low-income households, leading to financial inclusion and economic empowerment of women and underprivileged sections of the society. Sonata Finance has 621 branch offices across 10 states in India.
Financial Highlights
(_ in crore)
| Particulars | FY 2024-25 | FY 2023-24* |
| Total Income | 265.96 | 4.19 |
| Total Expenses | 248.69 | 20.83 |
| PBT | 17.27 | (16.64) |
| PAT | 12.66 | (13.71) |
*For the period from 28th March, 2024 to 31st March, 2024
The Board of Directors of Sonata and BSS at their respective meetings held on 12th August, 2024 have approved a Scheme of Amalgamation of Sonata with BSS, on a going concern basis, under the provisions of Sections 230 and 232 of the Companies Act, 2013 and the rules made thereunder. The Scheme would, however, be subject to the approval of the respective shareholders and creditors of Sonata and BSS and the approval of the concerned National Company Law Tribunal (NCLT) and other regulatory authorities, if required.
IVY PRODUCT INTERMEDIARIES LIMITED
At present, IVY Product Intermediaries Limited earns income from investment of its surplus money in fixed deposits.
Financial Highlights
| Particulars | FY 2024-25 | FY 2023-24 |
| Total Income | 0.48 | 0.45 |
| Total Expenses | 0.12 | 0.01 |
| PBT | 0.36 | 0.44 |
| PAT | 0.25 | 0.33 |
KOTAK KARMA FOUNDATION
On 26th June, 2023, the Bank has incorporated Kotak Karma Foundation under Section 8 of the Companies Act, 2013, as a wholly owned subsidiary for setting up a Centre of Excellence (CoE) of the Bank for furtherance of part of its Corporate Social Responsibility (CSR) initiatives.
TECHNOLOGY AND DIGITISATION
FY 2024-25 marked an important year in the Bank?s technology and digital transformation journey. This transformation was driven by the strategic belief that building a fast, resilient and scalable core is fundamental to delivering improved customer experiences in an increasingly digital-first world. The Bank undertook a comprehensive upgrade of the technology infrastructure and enhanced the UI/UX and core features of its applications ("apps") and platforms. This process also resulted in resolving the regulatory restrictions highlighted in the RBI Order dated 24th April, 2024, which were subsequently removed by its letter dated 12th February, 2025.
To drive the agenda of transforming for scale, the Bank is continuing to apply a three-pronged approach:
A) Developing resilient technical infrastructure, platforms and cybersecurity frameworks
B) Building a unified suite of digital tools for frontline colleagues, risk management and efficiency
C) Scaling the Digital Powerhouse (apps and platforms) while adhering to the core tenets of simplicity, speed and security
A. Developing resilient technical infrastructure, platforms and cybersecurity frameworks
The true strength of the Bank lies in the back-end infrastructure that handles data processing, business logic, authentication and integration with external services. The synergy between back-end and front-end systems enables the development of scalable, secure and feature-rich applications that meet the demands of todays users.
The Bank has driven this by modernising the core infrastructure and by creating multiple platforms across product lines.
Core Infrastructure Modernisation and Resilience
To ensure that front-end applications perform reliably at scale, the Bank has undertaken a comprehensive uplift of its Core Banking System (CBS). This includes enhancements in scalability, resilience and availability which are critical for handling increasing transaction volumes and ensuring uninterrupted service. The CBS improvements are complemented by high-availability configurations, disaster recovery drills and load reduction strategies, all of which contribute to a more robust and responsive digital backbone. Through architectural optimisation, the Bank has also improved its payment gateway response time by approximately 60% and improved its UPI technical decline rate from 0.89% in MarcRs. 2023 to 0.02% in MarcRs. 2025.
Unified Digital Platforms across Product Lines
A key enabler of seamless digital experiences is the creation of unified technology platforms that ensure cohesion between different systems. These platforms ensure that customer journeys are consistent and integrated, whether accessed via branch, mobile or voice channels.
Key Platforms:
Digital Banking Platform
The Bank?s Digital banking platform is designed to deliver personalised, resilient and scalable banking experiences. It comprises two foundational layers: the Kotak App Framework, enabling secure, consistent UX across 250+ flows and the Kotak Domain API Platform, powering rapid evolution across mobile, net and branch banking through cloud-native, observable and fault-tolerant APIs.
Observability Platform
The Bank has implemented monitoring for critical applications, databases and network devices, resulting in data collection of ~4 million metrics per minute. These monitoring tools have been integrated with central incident management and alerting systems resulting in pro-active service level monitoring and alerting, incident prevention and significant reduction in time to detect and resolve issues.
Unified Digital Onboarding Platform
Unified onboarding platform provides best-in-class unified branding customer experience across journeys and resiliency (99.5%+ uptime) due to cloud-native re-usable micro-services. From the customers perspective, the platform allows journey resumption from any point and supports web, mobile and assisted experiences. This platform seamlessly integrates with KYC modules, risk assessment components, customer drop-off management and other common banking services.
Kotak AI Platform
The Bank is building Kotak AI, a proprietary Generative AI platform that will serve as the cognitive core of the Bank?s ecosystem. It is being deeply embedded into the Bank?s technology fabric enabling predictive insights, contextual intelligence and seamless automation across interactions.
Beyond customer-facing tools, the Bank is also enhancing internal capabilities through AI. Koder equips software engineers with AI-driven development tools, while Kompanion serves as a conversational AI assistant for frontline and sales staff.
Kotak AI will play a pivotal role in the Bank?s digital transformation—not merely as a tool, but as a foundational capability that will empower employees and improve customer UX.
Data EXchange (DEX) Platform
A unified data platform for smart banking, the cloud-native DEX platform serves as the intelligence backbone of Kotak?s digital transformation. Purpose-built on modern cloud architecture, DEX ingests, processes and analyses vast volumes of data in real time—powering everything from hyper-personalised experiences to intelligent risk decisioning. DEX has broken down legacy data silos by unifying structured and unstructured data across business lines into a single, trusted platform.
It enables a 360-degree view of the customer, allowing for smarter engagement, faster response times and more proactive interventions. By embedding advanced analytics and machine learning models directly into the platform, DEX empowers real-time fraud detection, personalised product recommendations and automated credit risk scoring. The platforms scalability ensures that the Bank stays ahead as data volumes and complexity grow.
Cybersecurity: Fortifying Defences
As cyber threats grow in scale and sophistication, the Bank?s cybersecurity strategy has evolved from reactive defence to proactive resilience. The Bank has responded with a robust, multi-layered security framework that protects both the Bank?s assets and the trust of its customers.
At the core of the Bank?s defence is a 24x7 Security Operations Centre (SOC), which monitors a number of metrics, enabling real-time threat detection, ML-driven response, predictive analytics and coordinated incident management. This ensures rapid containment and resolution of threats before they escalate.
Customers? identity and access are both managed through multi-factor authentication and privileged access controls. Data is protected through end-to-end encryption, tokenisation and data loss prevention systems. Application security is embedded throughout the development lifecycle, supported by continuous testing and automated patching. The Bank goes beyond reactive measures with regular internal and external assessments, configuration audits, penetration testing and third-party security reviews. These proactive steps help the Bank stay ahead of evolving threats.
The Bank?s cybersecurity framework is fully aligned with regulatory requirements. The RBI inspection (22nd January - 7th February, 2025) confirmed strong implementation of the cybersecurity framework. The Bank maintains compliance with PCI DSS 4.0, ISO 27001 and the IT Act 2000. Governance is enforced through a three-line defence model: operational teams, independent oversight by the CISO and regular audits. In line with the Digital Personal Data Protection Act (DPDP) 2023, the Bank has strengthened its privacy infrastructure. A dedicated Data Privacy Office leads initiatives under the Risk Management Unit, ensuring privacy by design, clear policies and zero grievances reported. Finally, the Bank has built a strong security culture. All employees undergo mandatory cybersecurity training, with specialised programs tailored to roles and access levels—because true resilience is as much about people as it is about technology.
B. Building a unified suite of digital tools for frontline colleagues, risk management and efficiency a. Frontline Digitisation
Frontline Digitisation Initiatives have enabled branch colleagues to prioritise superior customer service by reducing time spent on operational routines. The key initiatives include the optimisation of transaction processing times (NEFT, IMPS and IFT) through the Transaction Authorisation System (TAS), reduction of batch processing time for daily branch reports and the introduction of an AI-powered bot, among others.
b. Risk Management
The Bank analyses risk through machine learning models that continuously analyse transaction patterns, identifying anomalies that human reviewers might miss. This real-time risk assessment happens across millions of transactions daily, maintaining security without introducing friction into customer experiences. The Bank?s monitoring infrastructure processes ~4 million metrics per minute, enabling deep visibility into system behaviour and potential risks. This massive data ingestion enables real-time fraud detection, automated compliance checks, dynamic risk scoring of customers based on behavioural patterns and external data sources and intelligent alert management.
c. Data Analytics
The Bank has made substantial progress in advancing its data analytics capabilities by establishing a world-class team of data scientists and delivering solutions across a broad spectrum of use cases. Data analytics has been integrated across the Bank?s operations to enhance risk underwriting througRs. 360-degree customer profiling, deepen engagement through personalised offerings based on personas, transaction behaviour and external activity and strengthen fraud prevention by detecting and curbing mule activity.
To support these advancements, the data stack has been modernised with a build out of a new data platform and deployment of new machine learning-based decisioning systems for use cases across the business. This has enabled us to launch new models for underwriting, behaviour scores and a new predictive modelling framework to address customer service and complaints.
C. Scaling the Digital Powerhouse (Apps/platforms) while adhering to the core tenets of simplicity, speed and security
Kotak has developed a suite of digital apps/platforms designed specifically to meet the diverse needs of its chosen customer segments.
New Kotak Bank App: The Bank has reimagined the new Banking App to be tailored for a diverse set of customers while applying the core tenets of speed, simplicity and security. Kotak?s New Bank App aims to serve the unique needs of affluent, non-residents and self-employed customers with minimal cognitive load. The app curates an experience to allow users to seamlessly switch between personal and business profiles. Features such as one-click mutual fund investments and the ability to convert purchases into EMIs in a few clicks are just some of the ways the app simplifies banking.
The new app facilitates the customers to manage their end-to-end financial use cases digitally from saving, investing, paying, spending, borrowing or protection, with minimal need to visit the Bank branches. The simplified and innovative user experience is optimised to offer frequently used actions within 2-3 clicks. The app is packed with features, with over 250 capabilities, including 50+ new additions. It is engineered to deepen customer engagement and drive product holding through pre-approved loans, credit card management, insurance, mutual funds, trading and investments and more, all accessible within a few clicks. Prioritising security, the app also integrates SIM binding and behavioural biometrics to ensure secure transactions.
Kotak Cherry
For investments, Kotak Cherry is the go-to app providing users with in-depth strategies, curated insights and a framework to build a multi-product portfolio. This app allows seamless one-click investments for Kotak Bank customers. It offers a unified experience where users can invest in mutual funds, fixed deposits and more, all in one place. Kotak Cherry launched ‘Portfolio Analyser Reports?, a personalised tool offering data-driven insights, detailed micro-to-macro analysis and Kotak?s recommendations for smarter mutual fund decisions. It also introduced ‘Cafe?, an interactive in-app hub that blends financial literacy with engaging content like blogs and videos.
Kotak811
For a billion Indians (core India), Kotak811 offers full-stack digital banking with sachet-sized products and features of rewards and cashbacks on transactions.
Launched in MarcRs. 2024, the Kotak811 App features a minimalistic and unbiased design that offers 100+ features, earning top ratings on both the App Store and Play store. It provides seamless digital journeys for sachet-sized cards, loans, investment and protection plans, all accessible in 2-3 clicks. Notably, it is among the few banking apps that facilitate and reward digital payments.
Kotak Neo
For customers keen on trading, the Kotak Neo platform enables users to trade and invest in stocks, equity & commodity derivatives, mutual funds, ETFs and IPOs all at one place. It is well integrated with the Kotak Bank platform for instant onboarding and one-click fund transfers, offering a frictionless experience to the Bank?s customers. Users benefits from Kotak?s in-house research including stock and sector insights, expert views and timely updates. The platform also empowers its users with features such as margin trading facilities and advanced trading and charting tools
Kotak fyn
For Corporate and SME customers, Kotak fyn is an enterprise portal providing a unified and integrated view of the account services, collections, payments and trade services. Kotak fyn?s latest feature enhancements focus on efficiency, security and customer empowerment, ensuring that customer businesses can operate with greater ease and confidence. Its enhanced features empower businesses with on-the-go trade approvals, digital Bank Guarantee booking and online Term Deposit management. Integrated FRM security ensures safe transactions, while a library of training videos simplifies feature adoption. These latest advancements focus on efficiency, security and customer empowerment.
Sampark Setu Platform
For Merchants, the Bank has developed the ‘Sampark Setu? platform, a bank-level unified platform, designed in-house to include all digital payment modes. It acts as a central hub for the merchant ecosystem, enabling seamless onboarding, settlement, reconciliation, risk and compliance. Hosted on Kotak cloud, it is designed to build high availability, scalability, security, operational efficiency and audit control. The Bank believes that these apps for its chosen customer segments are fundamental to its digital engagement with customers. Along with back-end tech upgrades, a significant focus has been placed on enhancing the UI/UX and core features of these apps to enhance customers? digital engagement with the Bank and enabling the Bank to deepen the relationship with customers.
Building the Bank of Tomorrow, Today
The Bank is in the process of building an evolving ecosystem engineered for the future. From intuitive customer-facing applications to intelligent platforms and resilient infrastructure, every layer is purposefully designed to deliver speed, intelligence and trust at scale. As technology continues to accelerate, the Bank is positioning itself not merely to keep pace, but to lead with a purpose of laying a responsible foundation for a future to serve its customers, colleagues and communities better.
HUMAN RESOURCES
FY 2024-25 was a year of transformation for the Bank and its Human Resource (HR) function, a year defined by conscious intent, collective commitment and measurable change. At the Group level, the employee strength was around 114,100 as on 31st March, 2025. The Bank standalone had over 75,300 full-time employees as on 31st March, 2025.
With customer centricity at the core, the Bank sharpened its focus on building a workplace where every Kotakite could thrive, supported through policies, programmes and by creating an environment where purpose, growth and belonging are woven into the everyday experience. The function anchored its initiatives around two key priorities: first, to ensure the Bank creates an employee experience that enhances overall engagement and continues to be recognised as a great place to work; and second, to focus on retaining key talent.
With the Five Pillars of Talent Engagement as its guiding framework, the Bank made visible and meaningful progress, bringing down attrition to 33.3% by the end of FY 2024-25 from 39.6% in FY 2023-24 and creating an employee experience where pride, growth and recognition were woven into every touchpoint.
Kotak Bank has been recognised among India?s Top 100 Best Companies to Work for two consecutive years (2024 and 2025), as one of the Best Employers among Nation Builders for four consecutive years (2022 to 2025) and among India?s Top 50 Best Workplaces in BFSI for two consecutive years (2024 and 2025) by Great Place to Work? (GPTW).
Best of Kotak for Kotakites
The Bank offered value propositions and benefits to its colleagues on preferential terms. In FY 2024-25, it launched Kotak Staff Home Loan Policy with the objective to provide Home Loan benefits to Kotak Bank colleagues at preferential rates.
Colleague Development
The Bank recognises that building a future-ready workforce requires an integrated focus on leadership development, continuous learning and internal career growth.
In FY 2024-25, the Bank advanced its colleague development agenda through targeted initiatives designed to strengthen leadership pipelines, democratise access to learning and accelerate professional mobility across the organisation through flagship programmes such as:
Kotak Young Leaders Council (KYLC), the Group?s flagship initiative, is shaping 84 young leaders to drive innovation, collaboration and strategic thinking, with grooming across special projects, mentorship, role movements and learning over four years under the guidance of the KYLC Leadership Sponsorship Committee.
Quantum Leadership, conducted in collaboration with ISB, trained approximately 50 senior leaders across the group to align leadership capabilities with strategic direction, while Lead to Transform engaged leaders to drive cross-collaboration, customer engagement and strategic foresight.
Executive Education programmes with premier IIMs engaged 150 employees across the Bank to strengthen strategic, digital and customer-centric capabilities.
Managerial Capability Building was reinforced through initiatives such as First Time Manager, training managers with foundational leadership skills, Manager of Managers, preparing leaders for higher-level leadership roles and Branch Manager Next, a pipeline programme for future branch management responsibilities.
The Strategic Leadership Program for CXO-minus-one leaders focused on building future-ready competencies to lead in an increasingly dynamic business landscape. It engaged 78 senior leaders from key business units.
Career growth was accelerated internally: Programmes such as GATI, Race and Unnati focused on enabling role transitions for Kotakites in junior grades across the Consumer and Commercial bank.
The launch of My Kareer, Kotak?s internal talent marketplace, allowed colleagues to discover opportunities, assess their strengths and take charge of their career pathways with transparency and ease.
In parallel, initiatives such as the Toastmasters programme strengthened communication and leadership skills across managerial levels, further empowering Kotakites to lead teams with confidence.
Building a Culture of Appreciation
The Bank recognises that creating a culture of appreciation is key to sustaining motivation, building collaboration and driving high performance.
In FY 2024-25, the Bank embedded recognition more deeply into daily work life through structured platforms and multiple initiatives, reinforcing a strong sense of belonging among Kotakites:
The launch of K-Applaud, a peer-driven rewards and recognition platform, brought appreciation closer to day-to-day work, empowering Kotakites to celebrate each other?s efforts in real time. Since its introduction in November 2024, over 13,000 recognitions were shared, each one strengthening bonds of camaraderie and positivity. Kotak Shining Stars is the groups most coveted awards, rewarding impactful initiatives and projects for the period April 2024 to MarcRs. 2025 and Infinity Awards, presented during Kotak?s annual anniversary celebration, honours contribution towards sustainability, community and inclusivity.
The 39th Anniversary Celebrations—addressed by founding and senior leadership—served not just as a corporate milestone, but as a reaffirmation of the collective spirit that drives Kotak forward.
Events such as Kotak Karnival turned offices into vibrant spaces of family, creativity and joy, offering colleagues and their loved ones opportunities to engage beyond the workplace.
Through these initiatives, the Bank inculcated a deeper culture of belonging, where every Kotakite felt seen, valued and celebrated.
Transparent Communication
The Bank focused on transparent communication to ensure that its strategy is clearly communicated across the organisation. The Bank had multiple townhalls led by the MD & CEO across locations to communicate the key priorities for the Bank. In addition, the Bank focused on two-way communication as a mechanism to ensure that it has structured feedback platforms, simplifying access to information and enhancing leadership connects. These efforts enabled colleagues to navigate transformation with clarity, participate more actively in organisational dialogue and align their contributions more meaningfully to business goals.
Several initiatives were undertaken, such as:
Amber, the AI-powered real-time feedback platform, continued to act as an always-on listening tool, giving colleagues a safe space to share their experiences and helping leadership stay closely connected to ground realities.
The fifth edition of My Kotak My Say, a Bank-wide survey conducted in collaboration with the Great Place to Work? Institute, achieved a robust 73% response rate, demonstrating the trust Kotakites place in the Bank?s intent to listen and act.
Regular Leadership Townhalls, Business Head sessions and quarterly connects kept teams aligned with business priorities, celebrated milestones and opened direct channels for dialogue.
The launch of Kotak World, an intuitive intranet platform, brought news, policies, engagement activities and opportunities to Kotakites fingertips, strengthening internal connect like never before.
The Bank also ensured to bring in transparency in its people processes, for example the performance management process was revamped to ensure KRAs are defined and communicated clearly, regular performance check-ins ensures that managers are sharing progress at regular intervals and share conversations ensured that managers are coached to have constructive performance conversations.
These touchpoints did more than disseminate information. They created a workplace where colleagues felt heard, respected and actively involved.
Enhanced Colleague Value Proposition
The Bank is deeply committed to creating a workplace where every Kotakite, regardless of role or background, has the opportunity to contribute, grow and thrive. This commitment is brought to life through a range of structured programmes, leadership initiatives and policy enhancements that place colleagues aspirations, wellbeing and growth at the centre.
In order to recognise high-performing talent and deepen engagement at leadership level, the Bank extended a special share-linked grant to the top 10% of performers in mid-to-senior-level roles, furthering the Colleague Value Proposition through meaningful rewards and sense of ownership.
Diversity, Equity, Inclusion and Belonging (DEIB) Initiatives
The Bank fosters a culture where every individual feels respected, valued and empowered to contribute.
Cultural Initiatives:
The Beyond Bias blended learning initiative sensitised over 27,000 colleagues through virtual and classroom sessions, creating greater awareness about visible and invisible biases and their impact on hiring, promotions and team dynamics.
Culture Building Through Leadership Accountability: The Am I an Inspiring Leader? Programme was rolled out to equip managers with empathetic, approachable and fair leadership skills, reinforcing a culture of respect and psychological safety at all levels. This initiative also established clear codes of conduct, ensuring non-acceptable behaviours are addressed decisively.
Mentorship and Coaching: The DRONA Coaching and Mentoring Program enabled Branch Managers and other people managers to actively support employee development, helping create leadership pipelines grounded in real-world mentorship and feedback.
Culture Drivers: More than 2,800 managers were trained as Culture Drivers, championing open discussions on fairness, inclusivity, collaboration and the spirit of Kotak?s organisational values.
Embedding Customer Centricity: Recognising that customer experience is everyone?s responsibility, the Bank trained approximately 8,500 leaders through dedicated Customer-First Thinking workshops, strengthening a service-oriented mindset across both customer-facing and support functions.
Under the Kotak Wonder Women (KWW) banner, a close-knit community of women colleagues continued to drive gender-centric initiatives, celebrate milestones and create new platforms for feedback, leadership development and career empowerment.
A structured Diversity and Inclusion Council, chaired by senior leadership, continues to drive policy, process and culture changes across the organisation to strengthen inclusivity.
The Bank has consistently introduced and enhanced policies to enable a supportive work environment for women:
The New Mother Benefit Policy offers flexible work arrangements and monthly financial support of _7,500 for 12 months to new mothers.
Travel policies were enhanced to provide higher entitlements for KWW colleagues and support for caregivers accompanying infants up to one year of age.
Collaboration with Uber provides women colleagues with safe travel options, especially during late working hours, reinforcing a focus on safety and convenience.
Kotak Wonder Women Meet ALL events created valuable networking opportunities by connecting women colleagues directly with senior leaders, enabling mentorship and guidance.
SheUnites sessions brought forward inspirational leadership journeys, fostering motivation and aspiration across the Banks workforce.
The Kotak ReLaunch Program was launched to offer meaningful second-career opportunities to women professionals returning to the workforce after career breaks, supporting re-entry through structured roles and development pathways.
Emotional Wellbeing and Health:
The Bank recognises that professional growth is intrinsically linked to personal wellbeing.
The Employee Assistance Program (EAP), offering 24x7 access to confidential professional counselling services, remained a cornerstone of emotional support for all Kotakites.
Preventive healthcare initiatives under the Annual Health Check (AHC) Program enabled employees aged 40+ and those in designated grades to avail health screenings at partnered diagnostic centres. Discounted health screenings were extended to other employees and their families.
Specialised health camps, such as breast cancer screenings and swine flu vaccination drives, were conducted to promote proactive health management.
Through the Kotak Worklife App, colleagues were given seamless access to booking health screenings, consulting doctors, availing telemedicine and engaging with nutritionists, making health management an integrated part of work life.
The Stepathon Challenge, launched in December 2024, encouraged daily physical activity among colleagues, witRs. 2,571 Kotakites participating enthusiastically, promoting both personal fitness and a spirit of collective wellness.
Employee Experience
To further strengthen the early employee experience, the Bank transitioned to creating a seamless and engaging experience for candidates before they join. The new onboarding experience provides a seamless, integrated experience for new joiners, ensuring faster assimilation, personalised engagement and a strong emotional connection from Day 1.
Through the Caring Kotakite Program, structured volunteering was encouraged across five key themes: Education and Livelihood, Relief and Rehabilitation, Healthcare, Sports and Environment and Sustainable Development. Between August - December 2024, about 6,600 employees volunteered across 20 activities in multiple cities, contributing about 1,000 hours and 214 volunteering days, reflecting a strong culture of giving back to society.
FY 2024-25 was a year where intent translated into action and action translated into real change—felt in the experiences, growth stories and pride of Kotakites across the organisation.
COMPLIANCE
The Bank has, since inception, a well-established and comprehensive compliance framework and structure to identify, monitor and manage the Compliance Risk in the Bank. The framework, policy and the structure also adhere to the regulatory prescriptions issued by the RBI and other regulators from time to time. In addition, all key subsidiaries of the Bank have independent Compliance Function. The Group CCO of the Bank and the Compliance Officers of Group interact periodically to ensure that all the supervisory and regulatory instructions are interpreted and implemented in letter and spirit. This also helps exchange of views on the best practices and to understand compliance risks across the Group. Guidance or directions are extended to the subsidiary companies? Compliance Officers, keeping in mind the overall responsibility of the Bank as the Holding Company. The Compliance Function is responsible for all the aspects of regulatory compliance across the Bank. Compliance is given the utmost importance with the tone from the Top and the Senior Management of the Bank and subsidiaries are directly monitoring the same.
The Compliance framework is the set of compliance risk management processes and tools, which shall be used by businesses, Management and Compliance Officers for managing the Banks compliance risks. Apart from the Bank?s compliance framework, the Bank and all the subsidiaries have their own compliance policies and operating procedures. The Compliance team supports top management and manages and supervises the compliance framework along with providing compliance assistance to various businesses/support functions. The Bank has a Board-approved New Products Approval Policy, which ensures that all new products or modifications to the existing product complies with applicable regulatory requirements. As prescribed by the RBI, the Bank has a system of conducting compliance review of its new products within six months of its launch to satisfy itself that all the regulatory prescriptions have been adhered to. These Review Reports are issued to the concerned businesses/Product Heads.
Compliance Department?s senior executives are members of various committees, which enable them to monitor the compliance risk of the institution effectively. The Compliance Department monitors the changes in existing regulations as well as introduction of new regulations. The Bank has put in place Compliance tracking and Monitoring system to ensure that the regulatory instructions are implemented effectively within the organisation. To gain an understanding of the evolving regulatory landscape, the Bank regularly scans the regulators websites and participates in industry working groups. The in-house Compliance Newsletter keeps the employees abreast of the key regulatory updates affecting the businesses of the Bank and its subsidiaries. The Compliance Department disseminates changes in the regulations by way of compliance alerts to the employees. Training on compliance matters is imparted to employees on an ongoing basis through both online and classroom sessions. The Compliance Department keeps the management/Board informed about important compliance-related matters through periodic reporting and regular meetings and ongoing engagement.
INTERNAL CONTROLS
The Bank has an Internal Audit (IA) department that is responsible for independently evaluating the adequacy and effectiveness of all internal control designs and implementation, risk management, governance systems and processes. IA is manned by appropriately skilled, experienced and qualified personnel. This team of IA includes qualified Information technology, data security and cybersecurity related risks personnel as well.
The Internal Audit department reviews business unit adherence to internal processes and procedures as well as to the regulatory and legal requirements and provide timely feedback to management for corrective action. The audit function also proactively recommends improvements in operational processes and service quality, wherever necessary. The Bank takes corrective actions to minimise the design risk, if any.
The Internal Audit department adopts a risk-based audit approach in congruence to the RBI Guidelines on Risk-Based Internal Audit (RBIA). Audits are conducted across various businesses and functions, i.e., Consumer, Commercial, Wholesale, Treasury (for domestic and overseas businesses). This includes audit of Operations units, Risk and Support functions, Information Security Audits, Information Technology audits, IT Governance and Infrastructure audits, etc. These are conducted to independently evaluate the adequacy and effectiveness of internal controls on an ongoing basis and pro-actively recommending enhancements thereof.
An oversight on the critical areas of operations is also kept through continuous off-site monitoring (COM) using centralised data led analysis and exception monitoring within IA. Further, using a risk-based approach, critical units of the Bank including retail branches are subjected to Independent Concurrent Audit process in line with the RBI guidelines. These concurrent audits are conducted through reputed external CA/ consultancy firms under the supervision of IA team of the Bank. The senior leadership and the Audit Committee of the Board regularly review the IA reports and concurrent audit reports along with COM findings and their remediation.
The Internal Audit department ensures dynamic reviews of risk classifications of auditable entity and IT elements within the Bank in preparing its Risk Based Audit Plan and calendar. These reviews take into consideration the Banks? overall strategic plans, changing IT landscape, risk trends as well as risk classifications evaluated periodically by the Strategy, Risk and Information Risk management functions of the Bank.
Proactive and collaborative work practices among Compliance, Risk, Fraud Control and Internal Audit functions of the Bank are ensured using cross-functional committee representations for these functions.
To ensure Independence, the Internal Audit function has a reporting line to the Audit Committee of the Board, with an administrative reporting to the Whole-Time Director of the Bank. The Audit team undergoes regular training both in-house and external to build the required subject matter expertise across domains of business, risks, technology and regulations. The Audit Committee of the Board reviews the effectiveness of controls, compliance with regulatory guidelines as also the performance of the Audit and provides guidance and direction that may be required.
RISK MANAGEMENT
A. RISK MANAGEMENT
The Group views risk management as a core competency and tries to ensure sound management of risks through timely identification, assessment and management. Risk management is a key internal process and is aimed at ensuring that the results of the activities that imply assuming a risk are consistent with the strategies and risk appetite and that adequate balance exists between the risk and benefit in order to maximise the value for the shareholders while delivering good customer outcomes.
Risk management capabilities are critical in sustaining the current growth and profitability. The Group has continued to develop and fine-tune relevant policies, tools and processes and over the years, enhanced risk management system and processes to be in compliance with the changing regulatory requirements and to effectively manage and mitigate risks to which it is exposed. There is an enhanced range of risk management policies and standards, that gives improved capability and capacity to manage risk in line with current and future Bank size, scale and complexity, as well as improved ownership and accountability for the management of risk.
The Group manages Risk under an Enterprise-wide Risk Management (ERM) framework that aligns risk and capital management to business strategy, protects its financial strength, reputation and ensures support to business activities for adding value to customers while creating sustainable shareholder value. The ERM policy sets the approach for Risk Management and is adopted by legal entities in the group, with suitable modifications, as appropriate for their individual businesses. The policy guides the organisation of the risk management function and the identification, measurement, management and reporting of risks. The ERM policy is complemented by policies and procedures/ guidelines that are aligned to individual risks and guide businesses in risk management, whilst working towards achieving their business objectives. These specific policies set the principles, standards and core requirements for the effective management of those risks. The ERM framework supports the MD & CEO and CRO in embedding strong risk management and risk culture while facilitating effective risk oversight through a sound and well-defined internal governance model, with a clear structure of risk ownership and accountability. The ERM framework lays down the following components for effective Risk Management across the Group
An Independent Risk organisation and governance structure with a clear common framework of risk ownership and accountability
Governance standards and controls to identify, measure, monitor and manage risks
Policies to support and guide risk taking activities across the Group
Risk Appetite statements
Standardised risk metrics and risk reports to identify and communicate and risks
Periodic stress testing to assess the impact of adverse business conditions on earnings, capital and liquidity
The Bank has adopted the three lines of defence model towards risk management. Business units and the independent risk management function, work in collaboration to ensure that business strategies and activities are consistent with the laid down policies and limits. Responsibilities for risk management at each line of defence are defined, thereby providing clarity in the roles and responsibilities towards risk management function.
The model adopted, provides a formalised, transparent governance structure that promotes active involvement from the Board and Senior Management in the risk management process to ensure a uniform view of risk across the Bank.
At the first line of defence are the various business lines that the Bank operates, who assume risk-taking positions on a day-to-day basis and manage it within approved framework and boundaries.
The second line of defence is made up of Risk Management, Finance and Compliance functions. This line provides independent review, challenge and oversight of the activities conducted by the first line and periodic reporting to the Board. The second line is responsible for frameworks, policies, appetite and limits, which the first line must adhere to and comply with in their operations. This line is also responsible for monitoring the risk management and reviewing the risks that the Bank is exposed to and ensures that the management and the Board is sufficiently informed of the risk exposure.
The third line of defence is the audit function that provides an independent assurance at the institutional level on the design and operation of the internal control, risk management and control processes through the first and second lines of defence, independent assessment of the first and second line of defence and reports to the audit committee of the Board.
The risk management framework based on the three lines of defence governance model is further strengthened by a strong risk culture that is present at all levels. All employees are responsible for understanding and managing risks within the context of their individual roles and responsibilities.
The Group Chief Risk Officer (CRO), who is appointed by the Board of Directors and reports directly to the MD & CEO, heads the independent risk function in the Bank and the Group. A disciplined, structured and integrated approach is adopted to managing risks. The Risk function provides an independent and integrated assessment of risks across various business lines. The risk management function has separate units responsible for management of credit risk, market risk, operational risk, liquidity and interest rate risk, group risk and technology risk. Each of these units reports to the CRO.
The Group has a well-established risk management structure, which includes the Board of Directors, supported by an experienced senior management team and various management committees as part of the Risk Governance framework. The risk management process is the responsibility of the Board of Directors, which approves risk policies and the delegation matrix. The Bank and every legal entity in the Group, operates within overall limits set by the Board and Committees to whom powers are delegated by the Board.
Every quarter, the CRO reports to the Risk Management Committee (RMC) and the Board, on the performance against risk appetite and the risk profile. Besides this, formal updates on various portfolios are provided to the RMC, Board periodically. Such regular and transparent risk reporting and discussion at the senior management level, facilitates communication and discussion of risks and mitigating strategies, across the organisation.
Risk Management while embedded in day-to-day activities, is also the focus of the Risk Management committee. The committee discusses and monitors known and emerging risks, reviews and monitor progress to address known issues. The RMC and Board members are appropriately qualified to discharge their responsibilities, have appropriate balance of industry knowledge, skills, experience, professional qualifications and relevant technical, financial expertise in risk disciplines or businesses.
The risk management processes of the Bank?s subsidiaries are the responsibility of their respective boards. A Group Risk Management committee (GRMC) ensures that there is a holistic view of risks at overall Group level. The Board has oversight of the management?s efforts to balance growth and prudent risk management, while creating value for stakeholders. The Group promotes the development of a risk culture that ensures a consistent application of risk framework in the group and that the risk function is understood and internalised at all levels in the organisation.
As of date, the Bank and major lending entities of the Group continue to be rated "AAA", reflecting the Groups strong financial risk profile, sound asset quality, robust liquidity and strong capital adequacy.
B. CAPITAL ADEQUACY
The Group pursues an active approach to capital management, driven by strategic and organisational requirements while taking into account the regulatory and macro-economic environment. Capital management involves an on-going review of the level of capitalisation against key objectives and to maintain a strong capital base to support long-term stability, planned business growth and risks inherent in various businesses. The strong Tier I capital position of the Group is part of the overall business strategy and a source of competitive advantage. It provides assurance to regulators and credit rating agencies, while protecting the interests of depositors, creditors and shareholders. Strong capitalisation also enables the Group to take advantage of attractive business opportunities. The Group strives to strike a balance between the need for retaining capital for strength and growth, while providing an adequate return to shareholders. The Group sets an internal capital adequacy ratio target that includes a discretionary cushion in excess of the minimum regulatory requirement.
In addition to the regulatory risk-based capital framework, the Group is also subject to minimum Leverage Ratio requirement. The leverage ratio is calculated by dividing Basel III tier 1 capital by the total of on-balance sheet assets and off-balance sheet items at their credit equivalent values. The strong tier 1 position of the group ensures a high leverage ratio for the group.
Capital planning is an important element of overall financial planning and capital requirements of businesses are assessed based on the growth plans. This is achieved through an Internal Capital Adequacy Assessment Process (ICAAP) whereby the Group conducts detailed strategic and capital planning over a five-year time horizon.
The Capital utilisation and requirements are monitored every quarter to ensure sufficient capital buffer above regulatory and internal requirement. Senior management considers the implications on capital, prior to making strategic decisions. During the year, the Bank and each legal entity in the Group placed emphasis on capital and liquidity to ensure that they were capitalised above internal and regulatory minimum requirements at all times, including under stress conditions.
C. RISK APPETITE
The risk appetite is set by the Board and is a top-down process consisting of specific quantitative and qualitative factors and provides an enforceable risk statement on the amount of risk the Group is willing to accept in support of its financial and strategic objectives. The risk appetite statements set the "Tone from the Top" and cover all key risk factors and clearly define the boundaries of risk taking. The Risk Appetite is set in a manner to facilitate sustainable growth and to manage risks in a way that sustains the confidence of all internal and external stakeholders. The risk appetite is cascaded to individual business segments and in addition to the formal risk appetite, early triggers are built into the framework, to alert of potential issues before they reach the formal risk appetite threshold. These triggers are designed for proactive risk management and help initiate early interventions.
The risk appetite is a key building block of the Bank?s risk management culture and risk management framework. Risk Appetite forms a key input to the business and capital planning process by linking risk strategy to the business strategy, through a set of comprehensive indicators. The Risk appetite statements are reviewed by senior management who recommend it to the Board for approval. Annual financial plans are tested against key risk appetite measures and regular monitoring of risk exposures is carried out to ensure that risk taking activity remains within risk appetite. Performance against approved risk appetite is measured every quarter and reviewed by the Senior Management, RMC & Board. Action is taken as needed, to maintain balance of risk and return. The framework is operational at the consolidated level as well as for key legal entities.
D. CREDIT RISK
Of the various types of risks which the Group assumes, credit risk contributes to the largest regulatory capital requirement. Credit risk arises as a result of failure or unwillingness on part of customer or counterparties to fulfil their contractual obligations. These obligations could arise from wholesale, retail advances, off balance sheet items or from investment and trading portfolio by way of issuer risk in debt paper, counterparty risk on derivative transactions and downgrade risk on non SLR investments and OTC contracts. The Group assumes credit risk in areas that are well understood and where there is sufficient expertise, resources and infrastructure to effectively measure and manage the risk and balance risk with reward.
Granting credit facilities to customers is one of the Group?s major sources of income. As this activity is also a key risk, the Group dedicates considerable resources to its management. The Group has a comprehensive top-down credit risk framework defined by Credit policies and Standards that sets out the principles and control requirements under which credit is extended to customers in various business divisions. The policies and standards cover all stages of the credit cycle, including origination; client ratings, risk assessment; credit approval; risk mitigation; documentation, administration, monitoring and recovery. These provide guidance in the formulation of business-specific credit policies and standards. The Group aims to have a consistent approach across legal entities when measuring, monitoring and managing credit risk.
Credit and investment decisions must comply with established policies, guidelines, business rules and risk assessment tools used to help make these decisions. Managing credit risk is the responsibility of several levels of employees - from those who deal directly with clients to authorizing officers. The Group has credit approving authorities and committee structures and a set of formal limits for the extension of credit, linked to the risk levels of the borrower and transaction. Authorities are delegated to positions commensurate with their function and the level of credit knowledge and judgement that employees holding that position are required to possess. The delegation of authority is reviewed at least annually.
The Credit philosophy in the Bank mandates that lending is based on credit analysis, with full understanding of the purpose of the loan and is commensurate to customer financials and ability to repay from business operations without compromising business continuity or levels of collateralisation are obtained based upon the nature of the transaction and the credit quality, size and structure of the borrower. In general, guarantees (including personal guarantees) or collateral, do not replace a lack of repayment capacity or an uncertain purpose of the transaction.
The Group evaluates the credit of every loan applicant and guarantor before approving any loan. The evaluation and approval process differs depending on whether the loan is a wholesale loan or a retail loan. The wholesale and retail portfolios are also managed separately owing to difference in the risk profile of the assets.
Wholesale lending is managed on a name-by-name basis for each type of counterparty and borrower Group. Internally developed credit rating models provide a consistent and structured assessment. The credit rating model consider a variety of criteria (quantitative, qualitative, financial and non-financial) to standardise credit decisions and focus on the quality of borrowers. Financial considerations include financial variables and ratios based on customer?s financial statements and non-financial considerations include, among other things, the industry to which the borrower?s businesses belong, the borrower?s competitive position in its industry, its operating and funding capabilities, the quality of its management, technological capabilities and labour relations. Wholesale borrowers are assessed individually and further reviewed and evaluated by experienced credit managers who consider relevant credit factors and supplement it with their expert judgment in the final determination of the borrowers risk. Depending on exposure and credit rating, levels of authority are defined so that credit decisions are always made at a level adequate to the risk involved. Wholesale credit is monitored at an aggregate portfolio, industry, individual client and borrower Group level. Annual credit reviews of borrowers are a key credit control measure. Parameters for new underwritings are clearly specified and internal ratings are assigned when a credit is initially approved. The ratings are reviewed at least once annually, with updated information on financial position, market position, industry economic condition and account conduct. Besides client account reviews, sector outlook and performance of borrowers within sectors are monitored and reported to senior management.
Retail portfolios typically consist of a large number of accounts of relatively small value loans. They consist of mortgage loans, vehicle loans, personal loans, credit cards, small business loans, etc. Some parts of retail lending are mainly schematic lending within pre-approved parameters. The credit assessment in such portfolios is typically done using a combination of client scoring, product policy, external credit reporting information such as credit bureaus where available and is also supplemented by Credit Officer?s judgment, where applicable. Internal historical information from previous borrowings also forms an input into credit decisions. There are specific guidelines for each product and the credit decision will take into account the parameters like loan to value, borrower demographics, transaction history with the Bank and other financial institutions, income, loan tenor, availability of guarantors and other relevant credit information.
Retail clients are monitored on pools of homogeneous borrowers and products. Business-specific credit risk policies and procedures including client acceptance criteria, approving authorities, frequency of reviews, as well as portfolio monitoring frameworks and robust collections and recovery processes are in place.
The delinquency status of borrowing accounts, a key indicator of credit quality, are closely monitored. An account is considered delinquent when payment has not been received in full, by the payment due date. Any delinquent account, including a revolving credit facility with limit excesses, is monitored and managed through a disciplined process by officers from business units and the collection function.
The Bank?s credit process is divided into three stages - pre-sanction, sanction and post -sanction.
At the pre-sanction stage, the independent credit function conducts credit appraisal and assign a borrower credit rating based on internal rating model. The credit rating takes into consideration the borrowers current and anticipated financial position and other relevant risk factors like Business risk, Industry and Management quality. The Bank has various rating models depending upon the borrower size and segment. Each credit rating assigned maps into a borrower?s probability of default. The borrower rating is supplemented by a separate risk rating assigned at the facility level, that takes into consideration additional factors, such as security, seniority of claim, structure and any other form of approved credit risk mitigation. At a minimum, two independent credit officers are involved in the rating decisions and the ratings are finalised by a more senior credit officer. Credit approval procedures follow the check-and-balance principle. There is a multi-level credit approval process requiring loan approval at successively higher levels depending on the size and collateral of the proposal.
In the post-sanction process, the Credit Administration team processes documentation, on the completion of which, credit is disbursed. There is regular reporting on portfolio distribution by risk grades, monitoring of covenants prescribed as part of sanction and pending documentation, if any.
An independent loan review team conducts reviews of credit exposures covering compliance to internal policies, sanction terms, regulatory guidelines, account conduct and suggests remedial measures to address irregularities if any. The Bank has an Enterprise-wide Review Framework that considers various financial and non-financial parameters to monitor quality of assets throughout their life cycle, based on preventive management and to identify signs of credit weakness at an early stage. Depending on the nature of the signals detected by the early warning system, a borrower may be classified into different internal attention levels. In case of loans where there is significant deterioration, the Bank employs various recovery mechanisms, including transferring the account to an internal unit specialised in managing problem accounts, to maximise collection from these accounts. The approaches may range from auction of borrower securities, court proceedings, sale of assets or corporate restructuring as needed.
E. COLLATERAL AND CREDIT RISK MITIGATION
Credit Risk mitigation, begins with proper customer selection through the assessment of the borrower, along financial and non-financial parameters, to meet commitments. The Group uses a number of methods to mitigate risk in its credit portfolio (on and off-balance sheet), depending on suitability of the mitigant for the credit, legal enforceability, type of customer and internal experience to manage the particular risk mitigation technique. Common credit risk mitigation techniques are facility structuring, obtaining security/collateral, guarantees and lending covenants. While collateral cannot replace a rigorous assessment of a borrower?s ability to meet obligations, it is an important complement. Mitigating mechanisms like syndication, loan assignments as well as reduction in the amount of credit granted are also used. While unsecured facilities may be provided, within the Board-approved limits for unsecured lending, collateral is taken wherever needed, depending upon the level of borrower risk and the type of loan granted.
The Bank has an approved Collateral management policy that sets out the acceptable types of collateral, valuation framework and the hair cut applicable. The haircut applied depends on collateral type and reflects the risk due to price volatility, time taken to liquidate the asset and realisation costs. Collateral values are assessed at the time of loan origination by an independent unit and the valuations are monitored and updated to ensure it reflects current realizable value, as per policy, depending on the type of collateral, legal environment and creditworthiness of the borrower. In cases where the value of collateral has materially declined, additional collateral may be sought to maintain the cover as per sanction terms.
The main types of collateral/security taken include cash and cash equivalents, immovable property, movable fixed assets, inventory and receivables. Guarantees from higher rated entities are also obtained in cases where credit worthiness of the standalone borrower is not sufficient to extend credit. Guarantees that are treated as eligible credit risk mitigation are monitored along with other credit exposures to the guarantor.
Legal enforceability of collateral obtained is critical, to improve recoveries in the event of a default. The Bank has specific requirements in its internal policies with regards to security verification and appropriate legal documentation. Periodic inspections of physical collateral are performed where appropriate and where reasonable means of doing so are available. The Credit Administration and Legal function ensure that there is timely registration, adequate legal documentation, in line with internal policies, to establish recourse to any collateral, security or other credit enhancements. The collateral obtained is released on repayment of all dues or on collection of the entire outstanding credit facility, provided no other existing right or lien for any other claim exists against the borrower.
F. CREDIT RISK CONCENTRATION
Credit concentrations are managed at two levels: portfolio level and the individual credit level. To avoid undue concentration in credit exposures and maintain diversification, the Bank operates within Board-approved limits or operational controls in its loan portfolio, that include -
Single/Group borrower and Substantial exposure limits
Sector limits
Exposure limits on below investment grade accounts
Country/Bank exposure limits
Unsecured Retail exposures
The Bank has defined internal limits for managing borrower concentrations, which are tighter than regulatory norms. Exposures are monitored against approved limits to guard against unacceptable risk concentrations and appropriate actions are taken in case of any excess. Concentration limits represent the maximum exposure levels the Bank will hold on its books. Besides controlling fresh exposure generation, loan sell-downs are used as a key tool in managing concentrations. Concentration levels in the credit portfolio are reported to senior management. Based on evaluation of risk and stress in various sectors, the Bank identifies stressed sectors and makes provisions for standard assets at rates higher than the regulatory minimum, in such sectors.
Concentration is also monitored in geographic locations in the retail portfolio, delinquency trends, types of credit facilities and collaterals. The risk appetite of the Bank mandates a diversified portfolio and has suitable metrics for avoiding excessive concentration of credit risk. Through periodic monitoring, analysis and reporting, the Bank ensures that the overall risk in the portfolio is diversified and consistent with the risk appetite mandate while achieving financial objectives.
As part of the Internal Capital Adequacy Assessment Process (ICAAP) under Pillar 2, the Bank assesses additional capital requirement if any, for concentration risks in the credit portfolio. This ensures that the Bank has sufficient capital, also taking into account concentration risks. If the concentration risks are judged to be excessive, the Bank has the opportunity and capacity to apply various risk mitigation measures.
G. MARKET RISK IN TRADING BOOK
Market Risk is the risk of possible economic loss arising from adverse changes in market risk factors such as interest rates, foreign exchange rates, credit spreads, commodity and equity prices and implied volatilities. Market Risk in the Bank is managed through the Board-approved Investment Policy, which sets out the Investment Philosophy of the Bank and its approach to Market Risk Management. The Risk Management Committee of the Bank approves and reviews performance against the Bank?s Market Risk Appetite. The Asset Liability Management Committee (ALCO) of the Bank approves the market risk and limit framework, the allocation of limits to business units and desks, the risk monitoring systems and risk control procedures. The Bank?s Board Committee for Derivative Products and the Senior Management Committee for Derivatives are responsible for the oversight of the derivatives business.
The Bank has a comprehensive market risk limit-framework including limits on sensitivity measures such as PV01, Duration, Option Greeks (Delta, Gamma, Vega, etc.) and other limits such as Value at Risk (VaR) limits, loss-triggers, value-limits, gap-limits, deal-size limits, tenor restrictions and holding-period limits.
The Market Risk Management unit reports directly to the Group Chief Risk Officer and ensures that all market risks are identified, assessed, monitored and reported for management decision making. The unit is responsible for identifying and escalating any risks, including deviations and limit breaches on a timely basis. Major market risk limits such as PV01, Bond Position Limits, Desk-wise FX Position limits, Greek limits, etc. are monitored on an intraday basis. The market risk control framework is enhanced by systems, policies and procedures.
The Bank uses Value at Risk (VaR) to quantify the potential loss from adverse moves in the financial markets. The VaR model is based on historical simulation and a confidence level of 99% for a one-day holding period. The effectiveness of the VaR model is periodically evaluated through a process of back-testing. The Bank periodically performs Stress testing and Scenario analysis to measure the exposure of the Bank to extreme, but low-probability market movements.
H. COUNTRY AND COUNTERPARTY CREDIT RISK
Country Risk is the risk of loss that the Bank faces, which is specifically attributed to events in a specific country. Country risk may be triggered by deterioration of economic conditions, political and social turmoil, asset nationalisation or expropriation, government?s refusal to pay external debt, foreign exchange control or currency depreciation in a country or a region.
The Bank has a Board-approved Country Risk Policy, which takes into account direct and indirect risk (both funded and non-funded exposures) for the purpose of identifying, measuring, monitoring and controlling country risk. As per the Policy, ALCO of the Bank is empowered to approve country limits.
Financial institutions are interrelated because of trading, clearing, counterparty, funding or other relationships. The Bank has exposure to many counterparties in the financial industry, directly and indirectly, including clearing houses, commercial banks, investment banks, mutual funds and other clients with which it regularly executes transactions. The Bank is exposed to counterparty risk arising from the potential inability of counterparties to fulfil their obligations under transactions.
According to the Investment Policy of the Bank, ALCO of the Bank fixes counterparty limits for inter-bank participants based on their capital adequacy, resource raising ability, asset quality, earnings, management and systems evaluation, liquidity and so on. These limits are reviewed from time to time. Pre-settlement credit risk for traded products arising from a counterparty potentially defaulting on its obligations is generally quantified by evaluation of the market price plus potential future exposure. This is used to calculate the regulatory capital and is included within the overall credit limits to counterparties for internal risk management.
Settlement risk is the potential loss incurred if a counterparty fails to fulfil its obligation after the Bank has performed its obligation under a contract or agreement at the settlement date. This risk is managed by close supervision of settlement transactions or by settling transactions on a delivery versus payment basis, where possible, based on accepted market practices.
With a view to reduce counterparty and systemic risk, there are regulatory initiatives directing OTC trades to be cleared through Central Counterparties (CCPs). Derivative transactions are cleared through Central Counterparties, where possible, to reduce counterparty credit exposure through netting and the margining process. The Bank has a dedicated team that manages the interface with CCPs and understands the implications of the risk transfer from being distributed among individual bilateral counterparties to CCPs. The Bank operates within ALCO approved limits on individual CCP.
The Bank manages country and counterparty credit exposures through careful selection of market counterparts, placing concentration limits on particular counterparty exposures, daily limit monitoring, escalation of excesses, pre-deal excess approvals, regular risk reporting and stress testing.
I. INTEREST RATE RISK IN BANKING BOOK (IRRBB)
IRRBB consists primarily of risk inherent in ALM activities and relates to the potential adverse impact of changes in market interest rates on future net interest income. IRRBB arises from mismatches in re-pricing of interest rate sensitive assets (RSA), rate sensitive liabilities (RSL) and rate sensitive off-balance sheet items in the banking book. The intensity of the impact depends largely on timing mismatches in the maturity and repricing of assets and liabilities and off-balance sheet positions. The aim of managing interest-rate risk is to ensure that exposure to fluctuations in interest rates is kept within acceptable limits. The Group assesses and manages interest rate risk in its banking book as well as including trading book.
ALCO is the guiding body for management of IRRBB in the Bank and sets the overall policy and risk limits. Balance Sheet Management Unit (BMU), which is part of the treasury, is entrusted with the responsibility of managing IRRBB and uses Funds Transfer Pricing (FTP) to transfer risk from business units to centralised treasury. No interest rate risk is retained within any business other than treasury. Interest rate risk is actively managed in order to dampen the impact of interest rate changes on net interest income. Measuring interest rate risk in the banking book, includes conventional parallel yield curve shifts as well as scenarios in which the curvature of the yield curve changes.
As interest rate risk can impact both net interest income (NII) and value of capital, it is assessed and managed from both earning and economic perspective. Bank uses earnings at risk (EaR) as a short-term risk indicator to assess the sensitivity of NII and NIM over a one-year period, to change in interest rates. From an economic perspective, which is a long-term risk indicator, it uses duration approach to determine the sensitivity of economic value of equity (EVE) to changes in interest rates. There are thresholds related to net interest income and the economic value of equity, considering the complexity of the balance sheet.
J. LIQUIDITY RISK
Liquidity risk is the risk that the Group is unable to meet its obligations when they fall due without adversely affecting its financial condition or not being able to finance growth of its assets without incurring a substantial increase in costs. The efficient management of liquidity is essential to the Group in order to retain the confidence of the financial markets and maintain the sustainability of the business. Liquidity is managed through the Group Liquidity policy, which is designed to maintain high quality liquid assets to protect against adverse funding conditions and to support day-to-day operations while maintaining a diversified funding profile. Diversification of funding sources is a key element of the funding strategy and funding sources are well diversified by source, instrument, term and geography. The choice of funding sources and instruments is based on a number of factors, including relative cost and market capacity as well as the objective to achieve an appropriate balance between the cost and the stability of funding. The organisation strives to maintain a long-term funding structure in line with the liquidity of its assets, with maturity profiles that are compatible with the generation of stable and recurrent cash flows, so that the balance sheet can be managed without liquidity strains in the short term. The funding of lending activity is fundamentally carried out using stable customer funds. The ongoing availability of this type of funding is dependent on a variety of factors such as general economic conditions, confidence of depositors in the economy, in the financial services industry and in the Group, availability and extent of deposit guarantees, as well as competition between banks or with other products such as mutual funds, for deposits.
ALCO of the Bank defines its liquidity risk management strategy and risk tolerances. BMU of the Bank is responsible for managing liquidity under the liquidity risk management framework. The framework is designed to maintain liquidity resources that are sufficient in amount, quality and funding tenor profile to support the liquidity risk appetite. Liquidity risk management strategies and practices are reviewed to align with changes to the external environment, including regulatory changes, business conditions and market developments. Actual and anticipated cash flows generated are monitored to ensure compliance with limits. Liquidity risk tolerance is an integral part of the Board-approved risk appetite statements.
There is an in internal funds transfer pricing mechanism under which each business is allocated the full funding cost required to support its assets, The Bank has applied maturity-based internal interest rates, which ensure that the price at contract level takes into account the funding cost and liquidity risk that the agreement has given rise to. Businesses that raise funding are compensated at an appropriate level for the liquidity benefit provided by the funding. Limit setting and transfer pricing are tools designed to control the level of liquidity risk taken and drive the appropriate mix of funds.
Liquidity risk is assessed in the Bank from both structural and dynamic perspective and the Bank uses various approaches such as stock approach, cash-flow approach and stress test approach to assess this risk. The Bank has also set prudential internal limits in addition to regulatory limits on liquidity gaps, call borrowing, inter-bank liabilities, etc. Cash flow management is critical for liquidity risk management and the Bank has developed models for predicting cash flows for products with indeterminate maturity, products with embedded options, contingents, etc. The outcome of the models is periodically back tested to test their effectiveness.
The Bank also manages its intra-day liquidity positions so that payments and settlement obligations are met on a timely basis. The Bank dynamically manages the queue of payments, forecasts the quantum and timing of cash flows, prioritizing critical payment transactions, assessing the drawing power of intraday liquidity facilities, etc.
The Bank follows a scenario-based approach for liquidity stress testing to evaluate the impact of stress on the liquidity position. The Liquidity Coverage Ratio (LCR) aims to promote short-term resilience of a bank?s liquidity risk profile and measures the extent to which a Banking Group?s High-quality liquid assets (HQLA) are sufficient to cover short-term expected cash outflows in a stressed scenario, over the next 30 calendar days. The expected cash outflows are arrived by applying specific run off rates, prescribed by the regulator, against outstanding liabilities and off-balance sheet commitments. These outflows are partially offset by inflows, which are calculated at regulatory prescribed inflow rates. The HQLA have to meet the defined eligibility criteria laid down by the regulator. The composition of liquid assets is monitored, to ensure diversification by asset class, counterparty and tenor.
The Group is well above the minimum regulatory requirement of 100% for the LCR. The Group considers the impact of its business decisions on the LCR and regularly monitors the LCR as part of the liquidity risk management framework.
Besides LCR, the Basel III liquidity framework also envisage the Net Stable Funding Ratio (NSFR), which measures the ratio between available stable funding (>1 year) and the required stable funding (> 1 year) to support long-term lending and other long-term assets. The Group is well above the regulatory requirement of 100%.
To supplement the monitoring of liquidity risk under normal business conditions, a framework has been designed to prevent and manage liquidity stress events. The Bank has a contingency liquidity plan (CLP) approved by ALCO and the Board, that plays an important role in its liquidity risk management framework. The CLP incorporates early warning indicators (EWIs) to forewarn emerging stress liquidity conditions and to maximise the time available to undertake appropriate mitigating strategies. The plan establishes an appropriate governance structure, lines of responsibility, contact lists to facilitate prompt communication with all key internal and external stakeholders and also defines strategies and possible actions to conserve or raise additional liquidity, under stress events of varying severity, to minimise adverse impact and overcome a potential crisis situation.
K. OPERATIONAL RISK
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, systems and external events. The objective of operational risk management at the Bank is to manage and control operational risk in a cost-effective manner within targeted levels as defined in the risk appetite. The centralised and independent operational risk management function manages this risk as guided by the Board-approved Operational Risk Management Policy.
The Board of Directors, Risk Management Committee and the Operational Risk Executive Committees (ORECs) have overall oversight function for operational risk management. The IT Risk and Information Security Committee provides direction for mitigating the operational risk in IT security. There is a group-wide IT security awareness programme (ARISTI) to disseminate facets of information security.
The Business Units and support functions are accountable for operational risks and controls in their respective areas, which they manage under the policies, standards, processes, procedures. The operational risk management framework laid down by the independent Operational Risk Management (ORM) function. The ORM function defines standardised tools and techniques such as Risk and control self-assessment (RCSA) to identify and assess operational risks and controls. The RCSA programme is executed by Business and support functions in accordance with the standards established by the ORM function. The ORM team provides independent challenge to the RCSAs and evaluates the residual risks. Key Risk Indicators (KRIs) are defined and tracked to monitor trends of certain key operational risk parameters. Internal audit and Internal Control teams provide oversight and assurance that activities are conducted as per laid down guidelines.
The Bank has an internal framework for reporting and capturing operational risk incidents, including Near-Miss incidents. Significant incidents reported are investigated to assess weaknesses in controls and identify areas for improvement. Disaster recovery and Business Continuity Plans (BCP) have been established for significant businesses to ensure continuity of operations and minimal disruption to customer services. These plans are periodically tested and reviewed to ensure their effectiveness.
The Bank has put in place a Product and Process Approval Committee (PAC) for approving the new products and associated processes. The main objective of the PAC is to ensure adequate control over the products and related processes of the Bank. At the PAC meetings, members deliberate and approve the adequacy of the construct of the product and processes associated with the product in addressing all aspects of Risk, Compliance and Operational Controls.
Risk transfer via insurance is a strategy to mitigate operational risk exposure at the Bank. The Operational Risk team helps to review and provide inputs on key insurance coverage basis trends and triggers emerging from unusual events or changes in risk profile, based on the introduction of new products, applications or developments in the external environment.
The Bank has a Board-approved Outsourcing policy which is aligned with the RBI Guidelines on outsourcing of financial services. While engaging the services of any Service Providers the respective business units ensure compliance with the Banks outsourcing policy. The Outsourcing Framework is in place which covers process to be followed from vendor on-boarding till the end of vendor engagement. The Bank has a system of risk assessment, standardised score cards for service providers to assess the Materiality and Criticality of vendors. The Review of Vendors is conducted on an annual basis. Critical Audit/IT security observations and incidents related to vendors are monitored.
L. FRAUD RISK
Fraud risk is the risk that arises due to illegal act of obtaining money, assets, or other property owned or held by a financial institution or its customers through deceit, deception, or other forms of misrepresentation by an individual or organisation. This may lead to significant financial losses and damage to the institutions reputation. These risks can arise internally, from employees or any other stakeholder and externally, from individuals outside the organisation. It involves the possibility of misrepresenting information, manipulating transactions, or exploiting vulnerabilities to deceive others.
The objective of fraud risk management at the Bank is to manage and control fraud risk in a cost-effective manner within the organisation?s risk appetite. The centralised and independent fraud risk management function manages this risk as guided by the Board-approved fraud risk management policy.
The Board of Directors (Board) and Risk Management Committee have an oversight function for fraud risk management. There is also a Special Committee of the Board for Monitoring and Follow-up of Frauds (SCBMF), which reviews all frauds above a threshold amount. Further, an Executive-level Fraud Risk Management Committee has been constituted under the chairmanship of the Group Chief Risk Officer.
The Bank has a robust fraud risk management setup, whereby Risk Containment Units under respective business conducts checks at the time of account opening including document verification, field investigations as well as conducts regular transaction monitoring on accounts of the Bank. The Bank has implemented E-FRM system, which enables timely triggers to identify anomalies, which are duly investigated and post conclusion, suitable action is taken. The Bank has a comprehensive unusual event framework, where each event is triggered and suitable root cause analysis is done to identify any process gaps which may be exploited by fraudsters.
The Bank has also implemented multiple Machine Learning Models for pro-active identification of potential fraud accounts both at the stage of on-boarding as well as in the existing account base of the Bank. The Bank also leverages market intelligence through consumption of external data and information to integrate with internal monitoring and enhance identification of potential frauds. The combined initiatives aid the Bank in preventing fraudsters from perpetrating frauds in the system and use the Bank for the purpose of fraudulent activities and money laundering.
The Credit Monitoring Unit of the Bank is responsible for monitoring frauds on the asset book of the Bank. The Bank has a system to monitor the relevant early warning triggers (EWS) defined to identify potential frauds. Each trigger is investigated and in case of any anomaly, suitable actions are taken as per the regulations. The Bank ensures that principles of natural justice are strictly adhered to before classifying/declaring an account as fraud.
The Bank has a Whistle blower policy and platform, which is open to employees and vendors for raising their concerns, with full confidentiality, on any fraud, malpractice or any other untoward activity or event. Staff accountability examination is conducted in all fraud cases and appropriate disciplinary action is taken against staff found negligent or complicit in or involved in perpetration of frauds and also in delayed identification/ reporting of frauds. Further, the Bank has a well laid out internal reporting framework which captures the nature, frequency and coverage of reporting to senior management and relevant committees to enable suitable decision-making.
Comprehensive due diligence is conducted before engaging any third-party service provider. Agreements with third-party service providers includes specific clauses to hold them accountable in situations where wilful negligence/malpractice by them is found to be a causative factor for fraud. Regular audits and performance reviews of third-party service providers is also conducted.
M. TECHNOLOGY RISKS
The Bank has committed significant resources to manage technology risk. A layered technology architecture is implemented to manage risks due to system failures, cyber-attacks etc. Disaster recovery and Business Continuity Plans (BCP) have been established and various functional and technology initiatives have been taken to enhance system resiliency.
End-of-Life/Out-of-Support systems pose operational and security risks such as vendor support, patch, bug fixes, etc. The Bank has a process for planned upgrades of Out-of-Support systems.
Effective access control mechanism is a key technology control to prevent unauthorised access. The access to business applications is provisioned by an independent team. The access is provided based on the roles and segregation of duties. Technology and Operational controls are implemented to manage privileged access to systems.
Cyber threats and the associated risks in the external environment have increased and the Bank works continuously to improve processes and controls to mitigate these risks. A Cyber Resilience Framework is established to mitigate the threats such as data breaches, malware, denial-of-service attacks, etc.
New digital product offerings are thoroughly assessed for cyber risks prior to roll-out and on an ongoing basis.
During the year, cyber drills were conducted to assess the effectiveness of the prevention and detection controls. Several initiatives were taken to enhance the security monitoring and incident response capability.
Reviews were conducted for assessing the ransomware mitigation controls and Microsoft 365 controls.
The Bank constantly monitors the technology risk environment, emerging regulatory requirements and mitigation strategies.
Ongoing audits/tests are conducted to assess the robustness of its technology controls. Solutions are implemented for continuously monitoring the external threats/vulnerabilities.
N. REPUTATION RISK
Trust is the foundation for the banking industry and is critical to building a strong customer franchise. Reputation risk is the risk of current or prospective loss arising from stakeholder?s adverse experience while dealing with the institution, which results in an adverse perception/loss of Trust in the institution. Reputational risk may arise as a result of an external event or actual or perceived actions and practices, which include operational and regulatory compliance failures. The occurrence of such events may adversely affect perceptions about the Bank held by the public, shareholders, investors, regulators and rating agencies. The impact of a risk event on the Banks reputation may exceed any direct cost of the risk event itself and may adversely impact the Bank. Reputation Risk most often results from the poor management of other risks and can arise from a variety of sources including direct sources such as poor financial performance, poor governance and indirect sources such as increased operational risk or control failures. Reputation is critical to achieving Group Objectives and targets and damage to it can have negative effects on its business. Managing reputation is a priority area for the Group and there is Zero tolerance for knowingly engaging in any activities that are not consistent with its values, Code of Conduct or policies and have the potential for unacceptable regulatory or reputational risk. The Group ERM policy lays down the framework to ensure reputation is managed effectively and consistently across the Group. This is supplemented by business procedures for identifying and escalating transactions that could pose material reputation risk, to senior management. Each employee has the responsibility to consider the impact on reputation of the Group, when engaging in any activity. The framework seeks to proactively identify and avoid areas that may result in potential damage to reputation and guidelines for managing crisis situations, if a reputation risk incident has occurred. The Group manages and minimises reputation risk through proactive business intelligence and relevant corrective action when needed and by conducting operations based on high ethical standards. The reputation risk management process is integrated with the Internal Capital Adequacy Assessment Process. While reputation risk can be difficult to quantify, the Bank has adopted a scorecard approach, based on expert judgment, to assess various reputation risk drivers and the overall level of reputation risk.
O. CONDUCT RISK
Conduct risk means any action that would cause harm to consumer protection, market integrity or competition. The scope and complexity of banking activities, give rise to a wide variety of regulatory requirements and expectations of the supervisory bodies, that must be met in relation to Conduct Issues. The Bank has identified conduct risk arising out of: Manipulation of financial benchmarks/markets, mis-selling, fair dealing with customers and compliance with laws of the land. Minimising conduct risk is critical to achieving long-term business goals and meeting regulatory standards. The Bank has processes for managing conduct risk and policies that guide staff in dealing with prevention of conflict of interest, employee conduct and dealing with proprietary and confidential information, so that they conduct themselves ethically and in compliance with the law. Conduct risk identification and mitigation are embedded in businesses and functions. Product approval, product review processes, suitability and appropriateness policies, are some of the measures embedded in the Bank?s framework to mitigate conduct risk. Conduct Risk is managed by maintaining a positive and dynamic culture that emphasises acting with integrity. Respective policies ensure that business decisions are guided by standards that take into account right conduct apart from commercial considerations. Conduct risk management is incorporated into HR practices, including recruiting, training, performance assessment, promotion and compensation processes. The group places zero tolerance on instances of professional or personal misconduct and abiding by the Code of Conduct is the responsibility of all employees in the Bank. Conduct risk is assessed in the ICAAP through a scorecard that considers the various drivers of conduct risk.
P. RISK CULTURE
Culture and values are a priority area for the Group. Risk culture refers to desired attitudes and behaviours relative to risk-taking. The governance model places emphasis on accountability and ownership in ensuring an appropriate level of independence and segregation of duties between business and control functions. The management of risk takes place at different hierarchical levels and is emphasised through various levels of committees, business lines, control and reporting functions. The Group embeds a strong risk culture, through clear communication and appropriate training for employees. The objective is to develop a disciplined risk culture where managing risk is a responsibility shared by all employees. The Group only assumes those risks that can be managed, with clear understanding of the implications. Senior Management receives regular and periodic information on various matters for the respective business lines and clearly communicate their plans, strategy and expected outcomes to team members. The Bank has a structured induction programme for new employees to help them in understanding various businesses across the Group and how risk management culture and practices support in building and sustaining the organisation. All employees are required to be familiar with risk management policies relevant to their roles and responsibilities and it is their responsibility to escalate potential risk issues to senior management, on a timely basis. The risk culture in the group lays emphasis on responsible business practices, prioritisation of customers? needs and appropriate disclosures. Risk is taken into consideration when preparing business plans and when launching new products. These objectives are backed by suitable policies and processes for implementation.
The Enterprise Risk Management Framework outlines the methodology used to manage the risks inherent in its activities, while ensuring the outcomes of risk-taking are aligned with its overall strategy and mandate. Risk culture is embedded in annual performance reviews. The performance management process measures both individual and collective performance and discourages incentive mechanisms which could lead to undue risk-taking. The framework reinforces a risk culture across the organisation that ensures a high level of risk awareness and makes risk management an integral part of organisational decision-making. The Bank?s risk management practices and culture enables it to take the risks necessary to fulfil its mandate while ensuring the organisation is financially sustainable.
Q. INTERNAL CAPITAL ADEQUACY ASSESSMENT PROCESS (‘ICAAP?)
Every year, the Group undertakes the Internal Capital Adequacy Assessment Process (‘ICAAP?), which provides management with a view of overall risks, assessment and capital allocated to cover the risks. The ICAAP is linked to overall business planning and establishes a strategy for maintaining appropriate capital levels. ICAAP is an assessment of all significant risks (Pillar II), other than Pillar I risks, to which the Group is exposed and covers the consideration of whether additional capital is required, based on internal assessment. Once the risks are identified, the Group determines the method and extent of risk mitigation. Risk mitigation takes place through strengthening policies, procedures, improving risk controls and having suitable contingency plans. Finally, the Group determines the risks that will be covered by capital and the level of capital sufficient to cover those risks. The ICAAP outcomes are reviewed by senior management and formally approved by the Board. The ICAAP is periodically enhanced to include greater detail and more in-depth analysis. The Group was adequately capitalised to cover Pillar I and Pillar II risks.
R. STRESS TESTING
Stress testing is a key element of the ICAAP and an integral tool in the Risk Management framework as it provides management a better understanding of how portfolios perform under adverse economic conditions. Stress testing is integral to strengthening the predictive approach to risk management and supplements other risk management tools by providing an estimate of tail risks to assess if capital levels are adequate under a forward-looking operating environment and in severe stress scenarios.
The Bank has a Board-approved Stress testing policy which is aligned to regulatory guidelines and covers material risks. Indicative stress scenarios are defined in the policy. Liquidity stress tests are also part of this framework and aim to ascertain whether the Bank has recourse to adequate liquidity to withstand the impact of approved stress scenarios. As actual events can sometimes be more severe than anticipated, management considers additional stresses outside these scenarios, as necessary. Reverse stress testing is used to explore extreme adverse events that would cause capital adequacy to fall below the internal capital threshold. While this identifies likely scenarios with an unacceptably high risk, there will be suitable measures to prevent or mitigate these that the Bank may implement.
The results of stress tests are interpreted in the context of the Bank?s internal risk appetite for capital adequacy and reported to management and the Board. The stress testing exercise provides an opportunity to develop suitable mitigating response prior to onset of actual conditions exhibiting the stress scenarios. The stress test outcomes are inputs to determine risk appetite and support business decision-making. The ICAAP integrates stress testing with capital planning and during the year, the Bank was above regulatory and internal target capital ratios under all approved stress scenarios.
S. PANDEMIC, GEO POLITICS AND TARIFFS
In recent years, pandemic-related disruptions of supply chains, manufacturing bottlenecks and general supply and demand conditions, as well as the war in Ukraine, contributed to inflationary dislocations across many countries. Material escalation in geopolitical risks such as the Russia-Ukraine conflict and tensions in the Middle East could aggravate ongoing global economic imbalances while increasing financial market volatilities and capital flight from emerging markets.
Fluctuations in policy interest rates globally to combat inflationary pressures and rising global trade tensions, particularly between the US and its trading partners in light of tariffs imposed under the Trump administration and the subsequent retaliatory trade measures by affected countries, among others, have contributed to the uncertainty of global economic prospects. It is uncertain whether the Trump administration will roll out additional policies, which may result in new universal or country specific trade restrictions, such as tariffs, quotas, or embargoes being imposed.
With a strong balance sheet and adequate liquidity position, the Group is well positioned to navigate the current economic environment and support its customers.
BANK?S BUSINESS STRATEGY
Refer section Strategy on pages 40-47 for Bank?s business strategy.
SAFE HARBOUR
This document contains certain forward-looking statements based on current expectations of the Bank?s management. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India and outside India, volatility in interest rates and in the securities market, new regulations and government policies that may impact the businesses of Kotak Group as well as its ability to implement the strategy. The Bank?s management does not undertake to update these statements.
This document does not constitute an offer or recommendation to buy or sell any securities of the Bank or any of its subsidiaries and associate companies. This document also does not constitute an offer or recommendation to buy or sell any financial product / service offered by Kotak Group, including but not limited to units of its mutual fund, life insurance policies and general insurance policies. The financial products/ services shall be subject to Terms and Conditions as mentioned in their respective documentation and/or websites as the case may be.
All investments in mutual funds and securities are subject to market risks and the NAV of the schemes may go up or down depending upon the factors and forces affecting the securities market. The performance of the sponsor, Kotak Mahindra Bank Limited, has no bearing on the expected performance of Kotak Mahindra Mutual Fund or any schemes there under.
Entry to the Solitaire programme is by invitation and at the sole discretion of the Bank. Meeting the programme eligibility criteria is not an implicit invitation to the programme. The Kotak Solitaire programme offers access to a curated selection of products and services from the Bank and its group companies. These offerings are extended to customers based on referrals and in compliance with applicable regulatory guidelines.
Figures for the previous year have been regrouped wherever necessary to conform to current year?s presentation.
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