Kotak Mahindra Bank completes acquisition of Sonata Finance for Rs. 537 Crore

Kotak Mahindra Bank

On March 28, Kotak Mahindra Bank Ltd announced its full acquisition of Sonata Finance Pvt Ltd, purchasing all issued and paid-up capital for an approximate total of Rs. 537 crore, according to an exchange filing. Following this transaction, Sonata Finance is now a fully owned subsidiary of Kotak Mahindra Bank.

Registered as a non-banking financial company (NBFC) and microfinance institution with the Reserve Bank of India (RBI), Sonata Finance operates across 10 states with 549 branches. As of December 31, 2023, it reported Assets Under Management (AUM) of around Rs 2,620 crore.

The RBI gave its nod to Kotak Mahindra for the acquisition and to designate Sonata as a business correspondent subsidiary on October 20, 2023, after initially receiving approval the day before. This strategic move aligns with Kotak Mahindra’s expansion plans in the microfinance sector, initially hinted at in a Moneycontrol report on August 28, 2023, which speculated on the bank’s acquisition prospects for the Lucknow-based microlender in FY24.

Following the announcement, Kotak Mahindra Bank’s shares saw a near 1 percent increase, reaching Rs.1,792.35 at 12.51 pm. However, since the start of the year, the bank’s share value has seen a decline of over 6 percent.

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