Kotak Mahindra Bank ordered to cease issuing new credit cards, accepting new customers via mobile and internet banking
The RBI’s stringent action is a consequence of the bank’s failure to rectify various shortcomings identified in the RBI’s IT evaluations for the years 2022 and 2023
The Reserve Bank of India (RBI) has mandated Kotak Mahindra Bank to immediately cease the registration of new customers via its online and mobile platforms and to discontinue issuing new credit cards. This enforcement comes as a result of the bank’s insufficient compliance with regulatory and risk management requirements. However, the bank is instructed to keep serving its existing clientele, including those holding credit cards.
The RBI’s stringent action is a consequence of the bank’s failure to rectify various shortcomings identified in the RBI’s IT evaluations for the years 2022 and 2023. The bank’s efforts to address issues in IT management, system updates, access controls, third-party risks, data protection, and emergency response plans were found to be lacking. Despite receiving corrective action plans, the bank’s compliance was deemed largely inadequate and unsatisfactory.
Future Compliance and Audit Procedures
The RBI has stated that the current restrictions will be reassessed after an exhaustive independent audit, which Kotak Mahindra Bank is required to conduct with prior approval from the RBI. The bank must effectively resolve all the deficiencies and inspection findings to the RBI’s satisfaction before the restrictions can be considered for removal.
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