RBI takes serious action against Kotak Mahindra

by Psu Connect
Date: 25-04-24

In the absence of a robust IT infrastructure and IT Risk Management framework, the bank’s Core Banking System and its online and digital banking channels have suffered frequent and significant outages in the last two years.

RBI takes serious action against Kotak Mahindra

The Reserve Bank of India, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, directed Kotak Mahindra Bank Limited to cease, with immediate effect, from-

(i) onboarding of new customers through its online and mobile banking channels and,

(ii) issuing fresh credit cards. The bank shall, however, continue to provide services to its existing customers, including its credit card customers.

These actions are necessitated based on significant concerns arising out of the Reserve Bank’s IT Examination of the bank for the years 2022 and 2023 and the continued failure on the part of the bank to address these concerns in a comprehensive and timely manner.

During the subsequent assessments, the bank was found to be significantly non-compliant with the Corrective Action Plans issued by the Reserve Bank for the years 2022 and 2023, as the compliances submitted by the bank were found to be either inadequate, incorrect, or not sustained.

The restrictions now being imposed will be reviewed upon completion of a comprehensive external audit to be commissioned by the bank with the prior approval of RBI, and remediation of all deficiencies that may be pointed out in the external audit as well as the observations contained in the RBI Inspections, to the satisfaction of the Reserve Bank.