Kotak Mahindra Bank, a private sector lender, announced that it will acquire 100% of the equity shares of Sonata Finance Pvt Ltd, a non-banking financial company-microfinance institution (NBFC-MFI), from its existing shareholders for Rs 537 crore. The transaction is subject to regulatory approvals, including those from the Reserve Bank of India (RBI). Sonata Finance will become a wholly owned subsidiary of the bank following the acquisition. This acquisition will allow the bank to expand its operations in rural and semi-urban markets in India’s northern states.
It will elevate the bank to the forefront of financial inclusion by providing economically disadvantaged and underserved households with commercially viable services. Furthermore, with over 500 branches and a customer base of 900,000, it is expected to supplement the banks’ microfinance network.
According to a statement, the acquisition is expected to be value accretive from the start due to economies of scale and the unlocking of efficiencies, as well as the bank’s own distribution footprint and technology. The bank will also use Sonata Finance’s network to offer customers a broader range of banking products. Sonata Finance manages assets worth Rs 1,903 crore.