 "Kotak Mahindra Bank")
Kotak Mahindra Bank is intensifying its focus on small and medium enterprises (SMEs) and the mid-market segments in South India, given the region's superior growth rate in these sectors relative to the nation, a senior executive revealed on Wednesday.
Currently, the bank's SME and mid-market portfolio forms 27 per cent of its entire wholesale banking book. Remarkably, the year-on-year growth for these sectors in Chennai and South India stands at 25 per cent as of August 2023. This is a stark contrast to the modest 1 per cent growth observed in the overall segment.
In South India, aggressive expansion within SMEs (companies with revenues ranging from Rs 50 crore to Rs 500 crore) and the mid-market sector (companies with revenues between Rs 500 crore and Rs 1500 crore) accounts for 45 per cent of Kotak's wholesale banking group (WBG) book. This is noticeably higher than the sub-25 per cent figure observed in other parts of the country.
Paritosh Kashyap, President and Head of Wholesale Banking at Kotak Mahindra Bank, commented on the sector's robust health, "The asset quality of firms in the SME and mid-market segment has been exemplary in recent times, which bolsters confidence and draws increased attention. Considering its projected contribution of $2-3 trillion to the Indian economy in the upcoming years, it's clear why many are keen to secure a significant portion of this promising sector."
With operations spanning 15 markets in southern India, Kotak's wholesale banking division has plans to incorporate an additional two to three markets annually. Their renewed interest in the SME and mid-market segments emanates from the sectors' growth potential, government incentives, and broader economic activities.
Kotak's initiatives in Chennai and other parts of southern India have enabled it to collaborate with enterprises in diverse domains including steel, food processing, real estate, automotive, engineering, wholesale trading, gems and jewellery, as well as chemicals and polymers. The bank recognises the SME and mid-market sector as pivotal to its future growth and is confident that its proactive strategies in these areas will significantly influence its overall performance in the forthcoming years.
(Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd)
