Kotak Mahindra Bank Ltd, a leading private sector lender, has finalized the purchase of the entire issued and paid-up capital of Sonata Finance Pvt Ltd for an estimated sum of around Rs. 537 crore. The acquisition was confirmed through a filing with the stock exchanges on March 28.
Following this transaction, Sonata Finance now operates as a wholly-owned subsidiary of Kotak Mahindra Bank.
Sonata Finance Pvt Ltd is recognized as a non-banking finance company (NBFC) and is registered with the Reserve Bank of India (RBI). It operates across 10 states through a network of 549 branches, boasting an Asset Under Management (AUM) of approximately Rs 2,620 crore as of December 31, 2023.
On October 20, 2023, the Reserve Bank of India (RBI) granted approval for Kotak Mahindra’s acquisition of Sonata Finance, paving the way for its transformation into a business correspondent subsidiary.
In a regulatory filing, Kotak Mahindra Bank disclosed that it had received approval from the Reserve Bank of India (RBI) on October 19, 2023, for its proposal to acquire 100 percent of the issued and paid-up capital of Sonata Finance. This approval, conveyed through a letter dated the same day, paved the way for Kotak Mahindra Bank to integrate Sonata Finance into its operations and designate it as a Business Correspondent subsidiary of the bank.
The RBI’s green light on October 20, 2023, marked a significant milestone for Kotak Mahindra’s strategic plans, affirming the bank’s vision to expand its footprint in the financial services sector. This approval came after months of anticipation, with earlier reports indicating Kotak Mahindra’s optimism about securing regulatory clearance for the acquisition of Sonata Finance in the fiscal year 2023-24.
The initial report by Moneycontrol on August 28, 2023, had hinted at Kotak Mahindra’s aspirations to finalize the acquisition of Sonata Finance, a Lucknow-based microlender. This move aligned with Kotak Mahindra’s broader strategy to enhance its presence in the microfinance segment and diversify its business portfolio.
Following the regulatory approvals and market speculations, Kotak Mahindra Bank’s shares witnessed a positive momentum, with a nearly 1 percent increase in trading at Rs. 1,792.35 at 12:51 pm. However, despite this recent uptick, the bank’s share value had experienced a decline of over 6 percent on a year-to-date basis, reflecting the challenges and fluctuations in the banking sector amidst broader market dynamics.