Kotak Mahindra Bank acquires Sonata Finance

Tags: Economics/Business

Kotak Mahindra Bank has successfully completed the acquisition of Sonata Finance Private Limited (Sonata) for approximately Rs 537 crore, aiming to bolster its presence in the microfinance sector.

An Overview of the News

• Sonata Finance is recognized as a Non-Banking Finance Company – Micro Finance Institution (NBFC-MFI) duly registered with the Reserve Bank of India (RBI).

• As of December 31, 2023, Sonata manages an impressive assets under management (AUM) of around Rs 2,620 crore, showcasing its robust financial standing.

• Sonata operates across 10 states, boasting a network of 549 branches that cater to the microfinance needs of underprivileged communities.

• This strategic acquisition aligns with Kotak Mahindra Bank's vision to expand its foothold in the microfinance segment, underscoring its commitment to financial inclusion and community development.

Changes in the Insurance Business:

• As Kotak Mahindra Bank restructures its insurance business, Zurich Insurance acquires a 70% stake in Kotak Mahindra General Insurance for ₹5,560 crore.

• This strategic decision comes after Kotak Mahindra Bank announced to sell 51% stake in Kotak Mahindra General Insurance to Zurich Insurance for ₹4,051 crore in November 2023.

Strategic Focus:

• The acquisition of Sonata Finance by Kotak Mahindra Bank and the reshuffle of its insurance business reflect strategic efforts to expand microfinance operations while realigning the focus in the insurance sector.