RBI Directs Kotak Mahindra Bank To Stop Onboarding New Customers, Issuing Fresh Credit Cards
The Reserve Bank of India in a press release today directed the the Kotak Mahindra Bank Limited to “cease and desist, with immediate effect, from onboarding of new customers through its online and mobile banking channels and issuing fresh credit cards.”
Announcing the decision, the regulator stated that the actions were necessitated based on “significant concerns” that came out of the Reserve Bank’s IT Examination of the bank for the years 2022 and 2023. The “continued failure” on the part of the bank to address the concerns in a “comprehensive and timely manner,“ also prompted the regulator bank to take action, according to the release.
Notably, the recently revealed electoral bond data showed the Infina Finance Private Limited, the subsidiary of the Kotak Mahindra Bank donated Rs 60 crore to the BJP amid the bank”s issues with the regulator, the scroll revealed.
Sharing the RBI release, Journalist Sucheta Dalal in an X post wrote, “This is huge !! So all the bonds in the world didn”t help? I would say that this is the action that was delayed — not the extension of term!.”
This is huge !! So all the bonds in the world didn”t help? I would say that this is the action that was delayed — not the extension of term! https://t.co/sQdJ7k9xCE
— Sucheta Dalal (@suchetadalal) April 24, 2024
The release then said that it observed serious deficiencies and non-compliance in areas such as IT inventory management, patch and change management, user access management, vendor risk management, etc. The release noted that it assessed the bank to be deficient in its IT Risk and Information Security Governance for two consecutive years.
The regulator further said that it decided to place certain business restrictions on the bank, saying that the decision was in the interest of customers. The banker”s bank added that the decision was to prevent any possible prolonged outage which may seriously impact not only the bank’s ability to render efficient customer service but also the financial ecosystem of digital banking and payment systems.
The bank also said that the restrictions are “without prejudice to any other regulatory, supervisory or enforcement action.” The bank shall, however, continue to provide services to its existing customers, including its credit card customers.
