- Date: April 24, 2024
The Reserve Bank of India has taken decisive action against Kotak Mahindra Bank Limited under Section 35A of the Banking Regulation Act, 1949, directing the bank to:
- Cease onboarding new customers through its online and mobile banking channels.
- Stop issuing fresh credit cards with immediate effect.
However, the bank will continue to serve its existing customers, including those with credit cards.
The reasons for these actions stem from serious concerns raised by the Reserve Bank’s IT Examination of the bank for 2022 and 2023:
- Deficiencies Found: The bank exhibited serious shortcomings in IT inventory management, patch and change management, user access management, vendor risk management, data security, and disaster recovery strategies.
- Non-Compliance: Despite repeated assessments and corrective action plans from the Reserve Bank, the bank failed to address these deficiencies adequately and in a timely manner.
- IT Outages: The bank’s IT infrastructure shortcomings led to frequent and significant service outages, including a recent disruption on April 15, 2024, causing significant customer inconvenience.
- Growth Challenges: Rapid growth in digital transactions, including credit card transactions, has further strained the bank’s IT systems.
The Reserve Bank has placed these restrictions to safeguard customer interests and prevent prolonged outages that could disrupt not only the bank’s operations but also the broader digital banking and payment systems.
These restrictions will remain in place until a comprehensive external audit, approved by RBI, identifies and remedies all deficiencies to the satisfaction of the Reserve Bank. This action is taken without prejudice to any further regulatory measures that may be necessary.
For further inquiries, contact Yogesh Dayal, Chief General Manager, Reserve Bank of India.
Contact Information:
- Email: helpdoc@rbi.org.in
- Phone: 022 – 2266 0502
Press Release: 2024-2025/172
RBI Circular link : https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=57769
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