Kotak Mahindra Bank is planning to carve out its digital platform and super app Kotak 811 into a whollyowned subsidiary, reported Business Line. Kotak 811 is currently a business unit of the bank’s retail arm.
Kotak 811 may undergo some modifications to be rehauled into a payment interface and system, wrote Business Line, quoting sources. The billionaire banker Uday Kotak’s son Jay Kotak, who is currently a Vice President at the bank and cohead of Kotak 811, is likely to head the subsidiary.
A highly placed source said that the move will put to rest some of the succession related issues across various business units and fortify Kotak Bank’s position in the payments space.
Once Kotak 811 is made into a subsidiary, it would approach the regulator for payment aggregator/payments gateway (PA/PG) licences.
Also, the digital platform, which is already available to non Kotak Bank customers, will aggressively extend financial services in the payments space to the public at large. “Work in this regard commenced some time last year and the bank may reach out to the regulator in a few months with the proposal,” said another person aware of the matter.
If spun off into a subsidiary, the digital platform can have its own funding sources and business plans, independent of the bank. Also, Kotak Mahindra Bank may be the first to structure its super app as a subsidiary. Sources also say the bank has had talks with the Reserve Bank of India in this regard.
However, since it currently caters predominantly to Kotak Bank customers, there are doubts on how ownership of the customer and the allied transaction or credit risks will be demarcated by the bank and Kotak 811.
“Since this would be the first instance of a bank carving out its digital platform into a whollyowned subsidiary, these are grey areas. Until effectively addressed, the regulator may not be comfortable with such a proposition,” said another person aware of the matter.