Infina Finance, Kotak Bank Promoter, Donates Rs 60 Cr to BJP

In a recent development that has caught the attention of the financial sector, Infina Finance, a promoter group entity of Kotak Mahindra Bank, has made a substantial donation to the Bharatiya Janata Party (BJP) through electoral bonds. The Mumbai-based non-banking financial company (NBFC) contributed electoral bonds worth Rs 60 crore, showcasing the significant financial interactions between corporate entities and political parties in India.

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Infina Finance, which is owned by the Kotak family, does not hold any shares in Kotak Mahindra Bank but is listed as one of its promoter group entities. This comes at a time when Kotak Mahindra Bank faces regulatory action from the Reserve Bank of India (RBI), including a prohibition on issuing new credit cards and onboarding new customers through its online and mobile banking channels. The RBI's stringent measures were prompted by what it described as "serious deficiencies" in the bank's IT risk management, identified during examinations for the years 2022 and 2023.

According to shareholding data available with the Bombay Stock Exchange (BSE) as of March 2024, the promoter and promoter group entities hold a 25.89 per cent stake in Kotak Mahindra Bank. Uday Kotak, the bank's promoter and single largest shareholder, alone holds a 25.71 per cent stake, with the remaining 0.18 per cent stake held by other promoter group entities.

Infina Finance's donation to the BJP was facilitated through electoral bonds purchased in denominations of Rs 1 crore across 2019, 2020, and 2021. This information was disclosed by the State Bank of India (SBI) to the Election Commission and made public last month. Established in 2008, Infina Finance Private Ltd engages in capital market financing along with proprietary trading and investments. As a non-deposit accepting, systemically important NBFC registered with the RBI, Infina reported a profit of Rs 105.55 crore for the fiscal year 2022-23 on a total income of Rs 227.84 crore.

The RBI's recent actions against Kotak Mahindra Bank highlight ongoing concerns regarding IT risk management within some of India's leading financial institutions. These developments underscore the importance of robust regulatory oversight to ensure the stability and integrity of the banking sector. Meanwhile, the substantial donation by Infina Finance to one of India's major political parties through electoral bonds raises questions about transparency and accountability in political financing.