There were speed bumps and headwinds that hit us last year, whether it was microfinance, unsecured loans or the technology ban. We are systematically working our way through each of these. Some issues are now completely behind us, and some need a bit more work. But every day isn’t going to be rosy. Overall, I remain very bullish. I still believe that the journey we’ve embarked upon is the right one.What are your expectations for FY26?
I think many of the headwinds we faced in FY25 are now behind us, allowing us to grow more aggressively. That said, new challenges may emerge. For instance, we’ll need to adjust our business model in response to changes in repo rates. Tariff tensions under (US President Donald) Trump and broader geopolitical uncertainties are also unknowns. But our North Star is now defined and once the engine is moving in the right direction, acceleration becomes much easier. I’m hopeful we can ramp up quickly and avoid too many distractions.
What’s your strategy for microfinance?
In the last two quarters, microfinance caused a lot of pain. Will it continue for one more quarter? Absolutely. Possibly two. That said, the business still made money, we didn’t lose any. The real question is about scale. A business that is this cyclical shouldn’t grow to a size where it keeps you up at night. We know this sector tends to blow up every 3-5 years. We need to find a way to temper that volatility.
How do you plan to do that?
We need to ask ourselves, is what we’re seeing now cyclical, or structural? The JLG model can no longer be relied on for protection. If we’re going to evaluate each customer individually, we have to consider how many of them have credit histories or are captured by credit bureaus. Then comes the question, what’s the cost of such credit assessments, and how does that impact the business model? This is a business model that has to be rethought.Is the stress on unsecured lending easing overall?
Stress in personal loans has come down. Credit card concerns have plateaued. In microfinance, however, we’re still seeing stress. We’ve already reduced our exposure significantly. In Q1, there could still be some elevated stress, but we expect some relief after that.
With the credit card embargo now lifted, how do you plan to grow that business?
We love the credit card business and customers love their cards too. The real question now is how to offer a range of cards that appeal to various customer segments. So yes, we’re reworking our credit card strategy and plan to pursue a much more aggressive approach in the coming months.
FY25 saw notable leadership attrition at Kotak. How are you addressing this?
Some of these people had been with us for a long time. They got new opportunities and that’s okay. We have enough bench strength to manage the transition. A certain level of fresh thinking is a good thing.
You explored IDBI Bank. IndusInd Bank is also facing issues. Is M&A a real possibility for Kotak?
M&A is definitely an important route for us. But any such transaction must fit both strategically and financially. Just because we have the capital doesn’t mean we’ll do a deal for the sake of it. We evaluate every opportunity that comes our way, and if it mee-ts both those criteria, we’ll go ahead.
