Kotak Mahindra Bank is shifting its focus towards expanding its mid-market corporate loan book, driven by slow growth in the large corporate sector and thin margins. The bank has established a mid-market corporate loan book of approximately ₹15,000 crore and expects a 20-25% growth in this segment over the next five years. This growth is anticipated across various sectors, including traditional ones like auto ancillaries and emerging ones such as education and shipping.
The bank’s mid-market vertical, launched in April 2023, has shown significant growth, with a compounded annual growth rate of over 35%. This segment targets corporates with a turnover of ₹500 crore to ₹1,500 crore, which falls between small and medium enterprises (SMEs) and large corporates. Many of these firms have evolved from traditional SMEs to more organized, corporate enterprises.
Kotak Mahindra Bank’s head of corporate banking, Anu Aggarwal, expects the SME and mid-market verticals to maintain a 20-25% growth rate over the next five years. The mid-market book currently accounts for 10-12% of the bank’s corporate book, but is expected to increase to at least 20% in the next three to five years, driven by growth across industries.
The bank’s wholesale banking segment, which includes corporate banking and SME, accounts for approximately 31% of its total ₹4.79 lakh crore in loans. This segment has seen a 17% year-on-year increase, led by an 18% growth in corporate banking, which includes the mid-market segment. To achieve its growth targets, the bank is also considering project finance, which was previously not a focus area. By expanding its mid-market corporate loan book and exploring new avenues like project finance, Kotak Mahindra Bank aims to drive profitable growth and diversify its lending portfolio.