Kotak Mahindra Bank to raise Rs 300 cr via infra bonds

Kotak Mahindra Bank plans to raise up to Rs 300 crore through infrastructure bonds, rated 'AAA/stable' by CRISIL. The rating agency said given the exemption from statutory reserve requirements and priority sector obligations, these bonds would be cost-effective.

The bonds will improve the bank's asset-liability profile.

CRISIL also upgraded the bank's tier-II bonds from 'AA+/stable' to 'AAA/stable', reflecting the successful scale-up of the group's lending business and strong asset quality. A sharp improvement in the bank's retail liability franchise enhanced stability in its resource profile, CRISIL said.

To arrive at the ratings, CRISIL consolidated the financial and business risk profiles of the bank and all its subsidiaries. There were high business and operational linkages among group entities, a common senior management team and a shared brand, it said.

The rating reflects the group's strong financial risk profile, good capital adequacy and strong earnings, though contribution from capital markets businesses has been subdued in recent years.

At 2.1 per cent, the group's return on assets for 2013-14 was among the highest in the sector. Backed by a revival in capital markets businesses, the group's earnings profile is expected to improve further.

Kotak Mahindra and associates are significant shareholders in Business Standard Limited.

Kotak Mahindra Group