S&P Global upgraded Kotak Mahindra Bank's credit rating from 'BBB-' to 'BBB' on Friday, February 21, 2025, following the Reserve Bank of India's (RBI) decision to lift operational restrictions on the bank. The move comes after the RBI removed the limits that had previously prevented Kotak Mahindra Bank from onboarding new customers and issuing fresh credit cards. S&P Global believes the bank is now well-positioned for growth over the next 24 months.

The rating agency stated “We have therefore removed the negative comparable rating analysis adjustment under our comparative rating analysis on the private sector bank. This leads to a higher SACP assessment of ‘BBB’, from ‘BBB-’ earlier”.

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The Reserve Bank of India (RBI) had instructed Kotak Mahindra Bank to halt digital customer onboarding and cease issuing credit cards in April 2024. In response, the bank took corrective actions and submitted compliance reports to the RBI. After reviewing the bank's actions, the central bank lifted the operational curbs on February 12, 2025, paving the way for the S&P Global credit rating upgrade.

S&P Global expects Kotak Mahindra Bank's funding profile to remain healthy, supported by the resumption of digital onboarding. This will allow the bank to accelerate the growth of low-cost digital deposits, improve deposit granularity, and strengthen its overall deposit franchise. These factors are likely to enhance the bank’s financial stability and support future growth.

S&P Global highlighted that Kotak Mahindra Bank maintains one of the highest current and savings account (CASA) deposit ratios in the industry. As of December 31, 2024, CASA deposits accounted for 42.3% of the bank’s total deposits, underscoring its strong position in low-cost funding.