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Kotak Mahindra Bank says its plan is to double its unified SME business from roughly ₹1.25 lakh crore to about ₹2.5 lakh crore in three to three-and-a-half years. The plan rests on three things: merging three business lines into one vertical, offering more than loans, and speeding up lending with digital tools and AI. Shekhar Bhandari, Head-SME at the bank, laid this out in a report credited to The Hindu BusinessLine. The target is a management focus, not a commitment, and Bhandari has already named a risk that could slow it.
The target and how to read it
Bhandari put it this way: “A business of this size doubling in three to three-and-a-half years is the focus we are working towards.” The ₹2.5 lakh crore figure is the headline’s arithmetic on a reported base of around ₹1.25 lakh crore. The report was credited to The Hindu BusinessLine and reproduced by TradingView. The original publication date is not visible in the version reviewed, so no date is assigned to it here.
Doubling over three years implies compound growth of roughly 26% a year, and over three and a half years roughly 22%. That is our own calculation, not a bank guidance figure. It compares with the 19% year-on-year SME advances growth in the bank’s latest filing and the roughly 25% growth Bhandari cited in a separate interview (both covered below).
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The bank’s own filing gives a slightly different starting point from the interview. Keep the two apart, because they differ in source and rounding.
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| Measure | Figure | Source |
|---|---|---|
| Unified SME portfolio | Around ₹1.25 lakh crore | Shekhar Bhandari, BusinessLine report via TradingView (date not shown) |
| SME advances | ₹1.2 lakh crore | Kotak Q4FY26 investor presentation, filed May 2, 2026 |
| SME advances growth | 19% year on year, 5% quarter on quarter | Same presentation |
| Share of total advances | 24% | Same presentation |
| SME share of fees and services income, FY2025-26 | 17%, growing 14% year on year | Same presentation |
| Expected future share of advances | Nearly 30% | Bhandari’s stated expectation, not a formal commitment |
What the strategy consists of
One SME vertical instead of three
Agri, business banking and corporate SME were brought under a single vertical. Bhandari said: “Customer-centricity was the biggest reason behind the merger. We wanted one onboarding process, one underwriting framework, one servicing model and one way of engaging with customers across the SME spectrum.”
Services beyond lending
The investor presentation describes a relationship-led proposition covering working capital, term loans, supply-chain finance, trade finance, cash management and foreign exchange. Bhandari framed it as a response to what SMEs now expect: “Funding alone is no longer enough. The real differentiator is whether you can provide funds on time, improve working capital efficiency and help customers run better businesses.”
Digital journeys and AI
The report mentions investment in digital customer journeys and AI workshops for SME promoters. No figure on the results of those workshops has been published, so their effect on growth cannot be judged. In a May 11, 2026 Moneycontrol interview, Bhandari described AI-assisted underwriting that shortens some turnaround stages while physical customer assessment stays in place.
The market gap behind the plan
Bhandari cited industry estimates, which the bank’s investor presentation does not confirm independently:
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- Total SME credit market: ₹66 lakh crore
- Already addressed by banks and NBFCs: ₹38 lakh crore
- Unmet demand: ₹28 lakh crore
On these numbers, Kotak’s addition of about ₹1.25 lakh crore would be a small share of the unmet gap. That is why the plan depends more on execution speed than on market size.
The main risk the bank names
In the Moneycontrol interview of May 11, 2026, Bhandari said: “The key risk to doubling the SME portfolio is the Iran crisis. During such times, even if demand is high, we will not be very exuberant in lending.” He also said the SME business had grown about 25% over the preceding 12 months. That is a statement from one interview, and it differs from the 19% year-on-year advances growth in the formal filing. The two figures probably reflect different scopes or measurement periods, though neither source explains the gap. The bank is signalling that credit discipline will take priority over hitting the timeline.
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Comparing with other banks
If you compare Kotak’s SME numbers with a peer’s, match the reporting period and the definition of SME advances. The interview’s rounded ₹1.25 lakh crore unified portfolio should not be set against another bank’s quarter-end advances figure without that adjustment.
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