Why Kotak Mahindra Bank faces strict RBI curbs: How does it affect you?

Kotak Mahindra Bank News: RBI bars Kotak Mahindra from issuing credit cards, onboarding customers online or via mobile channels.

Updated on: Apr 24, 2024, 17:01:23 IST

By HT News Desk

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Kotak Mahindra Bank News: On Wednesday, the Reserve Bank of India directed Kotak Mahindra Bankto immediately stop onboarding new customers through its online and mobile banking channels and issuing fresh credit cards.

FILE PHOTO: A man walks past the Kotak Mahindra Bank branch in New Delhi, India, September 6, 2017. REUTERS/Adnan Abidi/File Photo (REUTERS)

Why RBI took action against Kotak Mahindra Bank?

• RBI took action under Section 35A of the Banking Regulation Act, 1949, due to concerns raised in the IT examination for 2022 and 2023.

• RBI found significant deficiencies in IT inventory, patch management, user access, vendor risk, data security, and disaster recovery.

"Serious deficiencies and non-compliances were observed in IT inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and disaster recovery rigour and drill," the RBI's statement said.

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• RBI said the bank was deficient in IT risk and security governance for two consecutive years, failing to comply with corrective action plans. Over the past two years, it has experienced frequent and significant outages in the Core Banking System and digital channels.

• Bank fails to build necessary operational resilience despite high-level engagement with RBI, it said.

• Rapid growth in digital transactions, including transactions pertaining to credit cards, which is exacerbating the load on IT systems, the central bank said.

• RBI said that it placed restrictions in the “interest of customers and to prevent any possible prolonged outage which may seriously impact not only the bank’s ability to render efficient customer service but also the financial ecosystem of digital banking and payment systems.”

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Are you a Kotak Mahindra Bank customer? Here's how RBI's action affects you

RBI has barred Kotak Mahindra Bank from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards. However, the bank will continue to offer services to its existing customers, including those with credit cards.

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Furthermore, the central bank will review business restrictions after a comprehensive external audit and remediation of deficiencies.

ABOUT THE AUTHOR
HT News Desk
Follow the latest breaking news, major developments and agenda-setting stories from India and around the world with the newsdesk at Hindustan Times. Operating round the clock, the desk brings together experienced editors, reporters and correspondents to deliver fast, accurate and contextual reporting across subjects that influence public policy, governance, business, society and international affairs. The HT News Desk covers politics, elections, government policies, the economy, business and markets, science and technology, the environment, law and order, infrastructure, education, climate issues and geopolitics, while closely tracking developments across states, institutions and global capitals. The team also leads coverage of major breaking news events, policy announcements, court proceedings, natural disasters, public emergencies and significant international developments. Reports published by the newsdesk are based on information gathered from reporters on the ground, official statements, government agencies, court records, regulatory filings, recognised institutions and other authoritative sources. Stories undergo editorial scrutiny and verification processes to ensure accuracy, fairness and relevance, and are updated as events evolve and additional information becomes available. Whether covering a key political decision in New Delhi, an economic policy shift affecting millions, a landmark court ruling or a major global event, the HT News Desk aims to provide readers with reliable, fact-based journalism that delivers not only the latest developments but also the context and analysis needed to understand their wider implications.Read More

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