RBI Imposes Restrictions on Kotak Mahindra Bank Over Data Security and IT Concerns
The Reserve Bank of India (RBI) has taken action against Kotak Mahindra Bank citing significant data security and IT infrastructure deficiencies. Effective immediately, the bank is prohibited from onboarding new customers through online and mobile banking channels and issuing fresh credit cards. Existing customers will continue to receive services, including credit card operations.
The RBI’s decision stems from concerns raised during IT examinations conducted in 2022 and 2023. The bank has been found to have serious deficiencies in managing its IT inventory, securing data, and maintaining robust risk management frameworks. Despite repeated RBI directives to address these issues, Kotak Mahindra Bank has failed to take comprehensive and timely action.
As a result, the bank’s digital banking channels have experienced frequent and major outages, causing inconvenience to customers. The RBI expressed concerns that the bank’s IT resilience is inadequate to support its growth and digital transaction volume, posing potential risks to customers and the financial ecosystem.
The restrictions imposed by the RBI are intended to safeguard customers and prevent prolonged outages that could severely impact the bank’s service delivery and the stability of the digital banking and payment systems. The restrictions will be reviewed upon completion of a comprehensive external audit and satisfactory remediation of the identified deficiencies.
About Kotak Mahindra Bank
Kotak Mahindra Bank emerged in 1985 as Kotak Capital Management Finance. In 2003, it became the first non-banking finance company in India to transform into a bank. Today, the bank offers a wide range of financial services, including commercial banking, stock broking, mutual funds, insurance, and investment banking. As of December 2023, it has over 4.8 crore customers, 1,869 branches, and 3,239 ATMs.
