Big action by RBI against Kotak Mahindra Bank, ban on adding new customers
New Delhi: Reserve Bank of India (RBI) has taken major action against Kotak Mahindra Bank. Private banks have been banned from issuing new credit cards through online and mobile banking. Apart from this, a ban has also been imposed on adding new customers. However, RBI has also directed that Kotak Mahindra Bank should continue to provide services to its existing customers including its credit card customers.
RBI has issued a statement in this regard. According to this, ‘The Reserve Bank of India, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, has today directed Kotak Mahindra Bank Limited to cease operations with immediate effect. These include (i) onboarding new customers through its online and mobile banking channels and (ii) issuing new credit cards. However, the bank will continue to provide services to its existing customers including its credit card customers.Decision after continuous monitoring for two years
The RBI decision comes after two consecutive years of monitoring for 2022 and 2023. During this period, RBI found several significant deficiencies and non-compliances in the bank. The Bank failed to address these concerns in a comprehensive and timely manner.
RBI noted serious deficiencies in areas such as IT inventory management, patch and change management, user access management, vendor risk management, data security and data leakage prevention strategies, business continuity and disaster recovery rigor and drills. The statement said these actions were necessary based on significant concerns raised by the bank’s IT audit for the years 2022 and 2023 and the bank’s continued failure to deal with these concerns in a timely and appropriate manner. RBI said, ‘Serious deficiencies and non-compliances were observed in the areas of IT inventory management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and recovery efforts after the crisis.’ Kotak Mahindra Bank will not be able to add new customers
It said that for two consecutive years, the bank was found to have deficiencies in IT risk and information security operations contrary to the requirements under regulatory guidelines. Kotak Mahindra Bank has been directed to stop adding new customers and issuing new credit cards through its online and mobile banking with immediate effect. However, the bank will continue to provide services to its customers including its existing credit card holders.
