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India’s Kotak Bank gains on loan book acquisition

By Munikoti Rochan

10:40, 23 December 2021

An image of Kotak Mahindra Bank's corporate logo on the lender's website.
Kotak Mahindra Bank’s latest acquisition has bought Ford’s Indian finance business – Photo: Shutterstock

Stock in India’s Kotak Mahindra Bank climbed on Thursday following news the lender has acquired Ford Motor Company-owned Ford Credit India’s passenger vehicle finance portfolio.

The stock rose some 1.5% to INR1788.70 in afternoon trade on the National Stock Exchange (NSE) after the bank said its car finance subsidiary, Kotak Mahindra Prime, had bought the loan portfolio.  

The acquisition gives Kotak Mahindra Prime access to more than “16,000 high-quality customers with a total loan outstanding of INR4.25bn ($56.5m)”, according to a 22 December stockmarket statement.

Ford Credit India’s (FCIPL) customers will transition to Kotak Mahindra Prime over the next few months, it added.

Vehicle financing growth

“The acquisition of Ford Credit’s loan portfolio further reiterates our continued commitment to grow our vehicle financing business and have a strong presence in this space,” said Kotak Mahindra Prime’s managing director Vyomesh Kapasi.

“We would like to welcome Ford customers to Kotak Group and look forward to supporting their future financing needs with Kotak’s wide suite of product offerings.”


141.60 Price
-3.910% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.25


5.94 Price
-7.600% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.05


240.77 Price
-0.880% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.10


15.34 Price
-1.300% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.14

In September, the Kotak Mahindra Group announced it had bought the vehicle financing loan portfolio of Volkswagen Finance, comprising passenger cars, two-wheelers and commercial vehicles.

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Wide range of loans

Kotak Mahindra Prime offers loans for passenger cars, multi-utility vehicles, pre-owned cars and two-wheelers, in addition to providing inventory funding and term loans to car and two-wheeler dealers. It is also in the business of retail personal loans, developer funding and corporate loans.

The firm is the preferred lender for various manufacturers in the country and operates a retail distribution network of 121 branches in 21 states and union territories.

The Kotak Mahindra Bank has a market capitalisation of roughly INR3.54trn on the NSE, where its shares have dropped some 10% so far this year. The founders held 26% of the private sector lender’s stock as of the quarter through September.

FCIPL has been operating in the sub-continent since 2015.

Read more: Online marketplace Snapdeal files for 5m Mumbai IPO

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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