Kotak Mahindra Bank’s shares plummeted by over 10% on Thursday due to strict action initiated by the Reserve Bank of India (RBI). The central bank has ordered the bank to cease onboarding new customers through its online and mobile banking channels, including issuing fresh credit cards. This move stems from deficiencies identified in the bank’s IT system in 2022 and 2023.
The Reserve Bank of India (RBI) has imposed restrictions on Kotak Mahindra Bank due to concerns over data security and inadequate IT infrastructure. These restrictions include a ban on onboarding new customers online and issuing new credit cards. The RBI cited significant deficiencies in the bank’s IT inventory management, data security, and business continuity planning. The bank has faced frequent outages in its digital banking channels, causing inconvenience to customers. Despite repeated engagement by the RBI, the bank failed to address these issues adequately. The restrictions are intended to protect customers and prevent potential outages that could impact the financial ecosystem. They will be reviewed once a comprehensive external audit is completed and necessary corrective measures are taken.
India’s central bank, the Reserve Bank of India (RBI), has imposed restrictions on Kotak Mahindra Bank due to severe deficiencies in its IT systems and risk management practices. The bank has been ordered to halt onboarding new customers through online and mobile channels and cease issuing fresh credit cards. This action comes after extensive scrutiny and discussions with the RBI over the past two years, during which the bank failed to adequately address the concerns raised.
