Mumbai: Kotak Mahindra Bank was on Wednesday dealt a big blow by the Reserve Bank of India (RBI).
The country’s central bank and regulatory body has directed Kotak Mahindra Bank to stop onboarding new customers through its online and mobile banking channels.
“The Reserve Bank of India has today, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, directed Kotak Mahindra Bank Limited (hereinafter referred to as ‘the bank’) to cease and desist, with immediate effect, from (i) onboarding of new customers through its online and mobile banking channels and (ii) issuing fresh credit cards,” RBI stated.
Kotak Mahindra Bank has also been restricted from issuing new credit cards.
Existing customers won’t, however, be affected.
“The bank shall, however, continue to provide services to its existing customers, including its credit card customers,” said RBI.
RBI’s action against Kotak Mahindra Bank follows concerns raised during its IT examinations in 2022 and 2023.
“Serious deficiencies and non-compliances were observed in the areas of IT inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and disaster recovery rigour and drill, etc. For two consecutive years, the bank was assessed to be deficient in its IT Risk and Information Security Governance, contrary to requirements under Regulatory guidelines,” RBI said.
RBI provided the private bank corrective action plans both in 2022 and 2023. But during subsequent evaluations, RBI found non-compliance by Kotak Mahindra Bank.
RBI deemed the bank’s submissions regarding compliance as insufficient, inaccurate or unsustainable.
