Banking sector regulator Reserve Bank of India has taken major action against Kotak Mahindra Bank. RBI has banned Kotak Mahindra Bank from adding new customers through online or mobile banking channels and issuing new credit cards. However, RBI said that Kotak Mahindra Bank will continue to provide all services to its existing customers, including credit card customers.
RBI issued a press release saying that during the IT examination of the Reserve Bank of India for 2022 and 2023, concerns were expressed regarding various shortcomings in the bank. Kotak Mahindra Bank has failed to resolve these concerns within the stipulated time. RBI said that due to a lack of robust IT infrastructure and IT risk management framework, the bank’s core banking system and online and digital banking channels have faced several outages in the last two years. In the same month, on April 15, 2024, the services were halted, which caused the bank customers to face problems.
According to RBI, Kotak Mahindra Bank has failed to strengthen its IT systems with its growth. Over the last two years, RBI has been in constant touch with the bank’s top management to enhance its IT systems and overcome these problems, but the results have not been satisfactory.
According to RBI, the volume of bank digital transactions, including transactions related to credit cards, has increased significantly, increasing the load on IT systems. For this reason, considering the customers’ interests, RBI has imposed business restrictions on the bank to prevent long-term outages. This will affect the bank’s customer services and the financial performance of digital banking and payment systems. The ecosystem will also be shocked.
