Shares of India's Kotak Mahindra Bank and RBL Bank slumped on Monday as the lenders reported a jump in bad loans that hurt their second-quarter profit and margins, a trend that could continue for a few more quarters.

Last week, Kotak Mahindra Bank entered into an agreement to acquire Standard Chartered Bank's personal loan book in India for Rs 4,100 crore. The country's fourth-largest private lender aims to strengthen its position in the retail credit market.

Kotak Mahindra Bank shares plunged nearly 5% after Q2 results disappointed investors. The bank's market valuation eroded by Rs 15,954 crore, impacting the broader market.

Kotak Mahindra Bank's second quarter faced several challenges, including the Reserve Bank India's embargo and a weak macroeconomic environment.

Kotak Mahindra Bank shares dropped 7.2% to ₹1,735 after disappointing quarterly results. Analysts downgraded the target price on the stock amid concerns over unsecured portfolio stress and declining margins.

Kotak Mahindra Bank shares dropped significantly on Monday, falling by over7% to hit a low of Rs 1,735 in early trade, after the private lender reported mixed Q2 FY25 earnings. At 1:02 pm, shares of the bank were down 5.18% to Rs 1,773 on the Bombay Stock Exchange (BSE).

India's Kotak Mahindra Bank on Saturday reported a lower-than-expected 5% increase in July-September profit on higher loan provisions while lending margins shrank. The private lender's standalone net profit,

Kotak's net NPA increased to 0.43% from 0.37% YoY at September's end, while its GNPA increased to 1.49% from 1.72% YoY.

Kotak Mahindra Bank's Q2 earnings result was muted, leading to weak performance. According to Devang Gheewalla of Kotak Bank Ltd, the acquisition of Standard Chartered will help aid net interest margins (NIMs).