RBI bars Kotak Mahindra Bank from issuing fresh credit cards, onboarding new customers

RBI action on Kotak Bank: Reserve Bank of India (RBI) has taken supervisory action against private lender Kotak Mahindra Bank, prohibiting it from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards. This directive, issued under Section 35A of Banking Regulation Act, 1949, comes into immediate effect, with existing customers, including credit card holders, unaffected by restrictions.

RBI's decision stems from concerns raised during bank's IT examination for years 2022 and 2023. examination revealed serious deficiencies and non-compliances in various areas, including IT inventory management, patch and change management, user access management, vendor risk management, data security, and business continuity.

Despite successive assessments and corrective action plans issued by RBI, Kotak Mahindra Bank failed to equately dress se concerns, central bank said in a statement. bank's IT infrastructure and risk management framework were found lacking, leing to frequent and significant outages in its Core Banking System (CBS) and digital banking channels, causing inconvenience to customers.

recent service disruption on April 15, 2024, furr highlighted bank's operational resilience shortcomings. Despite RBI's continuous engagement over past two years to strengn its IT resilience, Kotak Mahindra Bank's outcomes were deemed unsatisfactory.

se restrictions will remain in place until a comprehensive external audit, approved by RBI, identifies and remedies all deficiencies highlighted in RBI inspections.