Following AU SFB, Federal Bank, Kotak Gets RBI Nod for J&K Bank stake

Private sector lender Kotak Mahindra Bank has received approval from the Reserve Bank of India (RBI) to acquire up to 9.99 percent stake in Jammu and Kashmir Bank, according to a regulatory filing made on Thursday. 

The approval, issued through an RBI letter dated May 6, 2026, allows the bank to build a significant minority holding in the regional lender, subject to regulatory conditions and compliance requirements.

As per the filing, Kotak Mahindra Bank will be permitted to acquire up to 9.99 percent of the paid-up share capital or voting rights in Jammu and Kashmir Bank. The lender clarified that the approval applies specifically to the application it had submitted earlier to the central bank.

The bank also noted certain conditions attached to the approval. One key requirement is that if Kotak Mahindra Bank’s holding in Jammu and Kashmir Bank falls below 5 percent at any point, it will need fresh prior approval from the RBI to again increase its stake to 5 percent or more. Additionally, the total shareholding must not exceed the 9.99 percent limit under any circumstances.

This development comes at a time when regulatory oversight of bank ownership in India continues to remain strict, especially in cases involving cross-shareholding between private sector lenders.

Similar approvals for AU Small Finance Bank and Federal Bank

In separate filings, AU Small Finance Bank and Federal Bank also confirmed that they have received RBI approval for Kotak Mahindra Bank to acquire stakes in their institutions as well. The approval, also dated May 6, 2026, allows Kotak Mahindra Bank, along with its subsidiaries and related investment entities, to collectively hold up to 9.99 percent in both banks.

AU Small Finance Bank stated that the approval covers the broader Kotak Mahindra Group, including subsidiaries and funds managed by them. Federal Bank similarly confirmed that Kotak Mahindra Bank has been permitted to acquire up to 9.99 percent of its paid-up capital or voting rights, subject to applicable regulations.

These approvals indicate a broader regulatory clearance for Kotak Mahindra Bank to expand minority investments in multiple financial institutions, although within defined limits.

Jammu and Kashmir Bank reports strong quarterly performance

The RBI approval comes shortly after Jammu and Kashmir Bank reported a strong financial performance for the fourth quarter of FY26. The bank recorded a net profit of INR 798 crore for the quarter ended March 31, 2026, marking a 36.5 percent increase compared to INR 585 crore in the same quarter of the previous year.

For the full financial year FY26, the bank reported its highest-ever annual profit of INR 2,363 crore. Total income for the quarter stood at INR 3,531 crore, while net interest income rose marginally by 0.5 percent year-on-year to INR 1,487.5 crore.

The bank also showed improvement in asset quality. Its gross non-performing assets (GNPA) ratio declined to 2.50 percent from 3 percent in the previous quarter. Net non-performing assets (NNPA) stood at 0.64 percent, indicating better loan recovery and credit management.

Business growth also remained strong, with total business increasing by 13.61 percent year-on-year to INR 2,90,341 crore. Net advances grew 18 percent during the same period. The bank’s CASA ratio stood at 45.65 percent, while its capital adequacy ratio was reported at 16.55 percent.

Kotak Mahindra Bank posts steady earnings growth

Kotak Mahindra Bank also reported a strong set of financial results for the March quarter of FY26. The bank posted a standalone net profit of INR 4,027 crore, reflecting a 13 percent year-on-year growth and exceeding market expectations.

Net interest income for the quarter rose 8.1 percent to INR 7,876 crore, supported by growth in advances and improved operational performance. The bank’s total deposits increased by 15 percent year-on-year to INR 5,72,456 crore, while its CASA ratio stood at 43.3 percent.

Asset quality also improved, with the gross NPA ratio declining to 1.20 percent and net NPA ratio standing at 0.25 percent.

On a consolidated basis, Kotak Mahindra Bank reported a 10 percent increase in profit after tax at INR 5,423 crore for the quarter. For the full year FY26, consolidated profit after tax stood at INR 19,288 crore. The board also recommended a dividend of INR 0.65 per equity share for the financial year.