MUMBAI: Axis Bank overtook Kotak Mahindra Bank on Thursday to become India’s third most valued private lender after a rout in the latter’s stock. Kotak Bank‘s stock opened deep in the red on Thursday a day after RBI restricted the lender from onboarding customers digitally and issuing credit cards, citing repeated failures to fix “serious deficiencies” in its IT system.
Kotak Bank shares closed 11% lower at Rs 1,643 apiece on the BSE. Its shareholders together lost nearly Rs 40,000 crore as its market capitalisation fell to Rs 3.3 lakh crore. Axis Bank, with a market cap of Rs 3.5 lakh crore, replaced Kotak Bank as the fourth most valued lender in India. The top three in the pecking order are HDFC Bank (Rs 11.5 lakh crore), ICICI Bank (Rs 7.8 lakh crore) and state-owned SBI (Rs 7.3 lakh crore). The last time Axis Bank was valued more than Kotak Bank was in Sept 2016, Refinitiv data showed.

For the bank’s founder Uday Kotak, the crash resulted in a $1.2-billion wealth erosion. Kotak, former MD & vice-chairman of the bank, also the main promoter, currently holds 25.9% in the bank. As the bank’s market cap dipped, Kotak’s holding in the lender dipped by about Rs 10,300 crore (about $1.2 billion) to Rs 85,596 crore (about $10.2 billion), BSE data showed.
The bank’s MD & CEO Ashok Vaswani, in a letter to customers, said that the bank is actively working to address the concerns raised and is in constant communication with the regulator to resolve any issues promptly.