Kotak Mahindra Bank on Friday announced that it will buy the personal loan business of Standard Chartered Bank. After this deal, UK-based Standard Chartered will focus on its wealth and investment banking in India.

Standard Chartered’s personal loan book stood at ₹4,100 crore ($488 million) as of Sept. 30, according to Kotak Mahindra Bank.

India's personal loan market has become increasingly competitive due to strong consumer demand. In November last year, the Reserve Bank of India directed banks to keep more capital in reserve for personal loans as rising demand was expected to increase risk exposure.

This has led to some slowdown in banks' personal loan growth rate, which slowed to 17% annually in August from 18.3% a year earlier.

Ambuj Chandna, Products, Consumer Bank, Kotak Mahindra Bank, said, “India’s unsecured lending market offers strong growth opportunities for Kotak among higher-income customers.”

The proposed deal is based on loans that are in good standing as per RBI guidelines and show no signs of default or distress.

Aditya Mandloi, Head of Wealth and Retail Banking, India and South Asia, Standard Chartered Bank, said, “We have decided to sell the personal loans business so that the bank can focus on its rapid growth in wealth, high-income segments and small-medium businesses (SMEs)."

Mandloi also said that India will remain an important market for Standard Chartered, and the bank will continue to invest and grow here. Kotak Mahindra Bank said the deal is expected to be completed in the next three months, subject to regulatory approvals and other conditions.