RBI Restricts Kotak Mahindra Bank from Acquiring New Customers Online or via Mobile Platforms

Kotak Mahindra Bank, one of the most significant banks in India, has been asked by the Reserve Bank of India (RBI) to follow some strict rules. These rules will make it difficult for the bank to attract new customers through their online and mobile banking services. Also, the bank has been asked to stop issuing new credit cards. These rules may seem harsh, but they are essential to ensure that the banking system remains stable and secure.

This regulatory action responds to concerns highlighted during the RBI's meticulous IT examinations conducted in 2022 and 2023. The examinations uncovered alarming deficiencies and instances of non-compliance within Kotak Mahindra Bank's IT infrastructure, spanning critical areas such as inventory management, patch and change management, user access control, vendor risk management, data security, and disaster recovery preparedness.

Despite receiving corrective action plans from the RBI in response to these findings for consecutive years, subsequent evaluations revealed persisting lapses and a need for improvement in the bank's compliance efforts. However, it's important to note that Kotak Mahindra Bank remains committed to addressing these issues and improving its compliance measures. The RBI found Kotak Mahindra Bank's submissions regarding compliance to be lacking in accuracy, sustainability, and depth, and the bank is actively working to rectify this.

RBI has asked Kotak Mahindra Bank, a well-known bank in India, to temporarily stop accepting new customers through its website and mobile app, and to stop issuing new credit cards until further notice. The RBI has taken this step to ensure that Kotak Mahindra Bank is complying with all the necessary rules and regulations.

Despite these stringent measures, existing customers of Kotak Mahindra Bank can rest assured that their services, including credit card facilities, will remain unaffected. However, the bank will need to address and rectify the identified deficiencies swiftly and comprehensively to regain regulatory compliance and restore its standing in the banking sector.