Hit by rising bad loans, private-sector lender, Kotak Mahindra Bank has decided to go ahead with its strategy of reducing unsecured loans in the months ahead but has ruled out the possibility of winding up the portfolio completely.
Out of its Rs 17,200 crore loan book, nearly 15 per cent of the advances, presently, are in the unsecured category. The proportion came down significantly in FY10 from 20 per cent in the year-ago period.
The bank started reducing its dependence on risky loans last year after delinquencies surged in the face of the global financial downturn and its spill over impacts in domestic market.
"At this point of time, we are being cautious and reducing our unsecured loans. However, we do not have any plans to wind up such loans completely," Kotak Mahindra Bank's Chief Financial Officer, Jaimin Bhatt told PTI in Mumbai.
However, as and when the market sentiments improve, the bank will bring its focus back on growing its retail
unsecured loans, Bhatt said.
Net non-performing assets (NPA) of the bank almost doubled to around two per cent as at end-June as compared to one per cent in the same period in last year while gross NPAs surged to 3.3 per cent.