RBI cracks down on Kotak Mahindra Bank; bars onboarding new customers online
RBI cracks down on Kotak Mahindra Bank; bars onboarding new customers online
In a major managerial move, the Reserve Bank of India (RBI) on Wednesday, April 24 bars Kotak Mahindra Bank (KMB) from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards, citing supervisory concerns over its technology platforms.
In the midst of investigations, the RBI found that the bank is materially deficient in building necessary operational resilience on account of its failure to build IT systems and controls commensurate with its growth.
RBI’s action came after Kotak Mahnidra Bank failed to address the concerns raised by RBI in the past 2 years
It is learnt the ban will not impact existing customers and Kotak can continue providing services to them, including its credit card customers.
The action may reflect on.the customer acquisition of Kotak Mahindra Bank as a significant portion of new account openings happen through online and mobile banking channels.
Also, the RBI action is bad news for KMB’s credit card business as well. As per experts, the central bank’s ban on issuing new credit cards could impact the bank’s co-branded credit card deals.
RBI further went on to add that actions are necessitated based on significant concerns arising out of Reserve Bank’s IT Examination of the bank for the years 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner.
News Edit K.V.Raman
