Paritosh Kashyap, Wholetime Director at Kotak Mahindra Bank

“We are chasing profitability, not market-share rankings,” said Paritosh Kashyap, Wholetime Director at Kotak Mahindra Bank. In an interview with businessline, he outlined the bank’s openness to acquisitions that offer the right cultural and technological fit, alongside a disciplined focus on profitable growth. Kashyap flagged key risks such as subdued private capex, rising SME margin pressures, and the potential impact of El Niño on inflation and growth, while highlighting evolving funding dynamics, including overseas borrowings and FCNR (B) deposits to support balance sheet expansion.

Edited excerpts:

Why banks are lining up to raise money from overseas markets?

RBI has permitted banks and PSUs to swap overseas borrowings at concessional rates and made swap on FCNR (B) deposits free for banks. This is likely to bring about $50-70 billion plus into the country through FCNR (B) deposits and borrowings by banks and PSUs. Large part of the FCNR (B) deposits will require leverage. So, banks will raise money to fund such leverage. Because of increased demand for such leverage, spreads payable by banks have marginally moved up. There is no currency risk because the FCNR (B) deposit will be fully swapped and the offshore borrowing will be lent in foreign currency.

Do you see the El-Niño impacting inflation and growth for India in FY27?

El-Niño will impact agriculture, rural consumption and allied spaces. It does pose risk for both inflation and economic growth. Some of the sectors like microfinance and crop loans may show increased risks.

Are you worried about rising NPAs, especially in retail, personal loans and SMEs? And now that the US-Iran conflict appears to be ending, has your outlook changed?

I don’t think the retail segment is getting impacted because the consumption story in India is strong. Unless borrowers are individually over-leveraged, retail NPAs are not a concern.

SMEs, however, face more pressure. While the ECLGS scheme supports liquidity, profitability remains challenged due to rising input costs. SMEs with thin value-addition margins are especially vulnerable.

Have underwriting standards been tightened?

Yes — post the start of the West Asia conflict. Not by changing credit norms, but by escalating borderline cases to higher approval levels. If parameters are not met, take it to one level higher.

Why has Kotak Bank been quiet on acquisitions?

Our bank is open to acquisitions but only at the right price, with the right cultural and technological fit. We have surplus capital and are willing to deploy it when the right opportunity arises.

Your bank has long been the No. 4 private bank. Is there a plan to move to No. 3?

Market-share ranking is not a target. The bank focuses on its own strengths, capital and productivity rather than overtaking competitors. Our bank has the capital for growth and has laid out its strategy for transforming for scale. Growth is not for the sake of growth but needs to be profitable.

What is driving retail consumption?

India’s per-family annual spend (about $2,400) is far below peers like Indonesia and the Philippines. As income levels rise, this gap gives long-term consumption tailwinds. Most consumption in India is non-discretionary, so demand is resilient.

What is the credit outlook for SMEs?

Systemically, SMEs should remain stable because utilisation levels are not rising — meaning leverage is under control. Government support through ECLGS also helps. But SMEs supplying to large corporates face margin compression because they cannot fully pass on higher fuel, labour and raw-material costs. Larger corporates, with stronger bargaining power, squeeze vendor pricing.

Which segments are seeing credit pickup, and which are lagging?

Overall, credit pickup is in line with last year; the headline number may not reflect the true credit offtake because corporates borrow from multiple markets — ECB, CPs, bonds, NBFCs — none of which show up in RBI’s bank credit data. Large corporates are comfortable due to low leverage and improved productivity.

SMEs are facing relatively higher risk. Infra, defence and data centres are seeing good activity; most other sectors are dominated by refinancing rather than fresh capex.

Which sectors are showing stress?

Ceramics, logistics, commercial vehicles and downstream chemicals — primarily due to fuel-price shocks and supply-chain disruptions. Small vendors that supply to large anchors at fixed prices are the first to show stress as margins were already wafer-thin, and rising costs squeeze them further

Is private capex picking up?

No. This is the biggest risk. Private capex has been subdued for about a decade. Higher rates, expensive oil and lower equity valuations further dampen sentiment. Government capex remains the primary driver.

Why are deposits difficult to mobilise?

Money is not leaving the system — it is shifting from individuals to institutions (mutual funds, insurers). This wholesaleisation increases LCR (liquidity coverage ratio) requirements and reduces lendable resources. When money moves from individual to institutions, the colour of money changes.

Published on June 21, 2026