Kotak Mahindra Bank (KMBL) has agreed to acquire Sonata Finance Private Limited (SFPL), an Indian non-banking finance company, from existing shareholders for about INR 537 crores in cash.

Headquartered in Lucknow, Sonata Finance provides micro finance loans to economically weak people and especially to ladies via joint liability group (JLG) and individual lending (IL) mode. The microfinance institution operates in 10 states via 502 branches and has active nearly nine lakh women customers and a workforce of 2,882 employees as of 31 December 2022.

Anup Kumar Singh — Sonata Finance CEO and MD said: “I am extremely pleased that Sonata will be in trusted and experienced hands of the Kotak Mahindra Group. Sonata was started with the objective of providing financing to underserved customer segment. I believe this mission is best served in a scalable and sustainable manner on a big bank’s platform.

“The transaction will bring immense benefits to Sonata’s customers, employees and other stakeholders. I am pleased that current customer households of Sonata will benefit from Kotak Bank’s full range of products, and best-in-class digital services.”

According to Kotak Mahindra Bank, the acquisition gives it a robust platform to help it become an important player in the financial inclusion segment to serve in a commercially viable manner to economically weaker and underserved households.

Kotak Mahindra Bank plans to utilize the network of Sonata Finance to offer a broader suite of banking products to the latter’s customer base by suiting their emerging banking requirements.

The bank said that Sonata Finance’s strong footprint in rural and semi-urban markets in northern India is complementary to its microfinance network.

Manish Kothari — Kotak Mahindra Bank President of Commercial Banking said: “Sonata is a leading microfinance player and has built a strong enterprise over the last two decades. This acquisition is in sync with our broad vision and strategy.

“We had successfully acquired BSS Microfinance in 2017 and since then have been able to integrate & steadily grow our presence in the financial inclusion segment with an advances book in excess of ₹ 5,300 crores serving ~1.3 million borrowers.

“There are significant potential synergies to be realized as a result of this acquisition and we look forward to continue serving the customers in a smooth and consistent manner and ensuring their needs are well-served going forward.”

The deal is conditional on approval from the Reserve Bank of India and other regulatory approvals.

  Anup Kumar Singh, Banking acquisition news, Banking industry news, India, Kotak Mahindra Bank, Lucknow, Manish Kothari, Sonata Finance