Business

RBI Bars Kotak Mahindra Bank: New Credit Cards, Customers via Online Banking and Mobile Banking Suspended

The Reserve Bank of India (RBI) has mandated that Kotak Mahindra Bank cease the process of accepting new clients via its mobile and internet banking platforms, as well as the issuance of new credit cards. According to the RBI’s directive, the bank is still able to offer services to its current clientele, which includes those who use its credit cards. The Reserve Bank of India (RBI) stated, “These actions are necessary due to serious concerns that emerged from the Reserve Bank’s IT examination of the bank for the years 2022 and 2023 and the bank’s ongoing inability to adequately and promptly address these concerns.”

What does this mean for Kotak Mahindra Bank customers?

Kotak Mahindra Bank was instructed by the RBI to cease issuing new credit cards and enrolling new clients through mobile banking.

Why has the RBI barred Kotak Mahindra Bank?

The RBI gave Kotak Mahindra Bank instructions to cease issuing new credit cards and to stop using mobile banking to onboard new clients.

Why has the RBI barred Kotak Mahindra Bank?

According to the RBI, the bank had major flaws and non-compliances in the areas of vendor risk management, business continuity and disaster recovery drills, patch and change management, user access management, data security, and data leak prevention strategy. According to the central bank, the bank was found to have inadequate information security governance and IT risk management for two years in a row.

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“In the absence of a robust IT infrastructure and IT risk management framework, the bank’s Core Banking System (CBS) and its online and digital banking channels have suffered frequent and significant outages in the last two years, the most recent being a service disruption on April 15, 2024, resulting in serious customer inconveniences,” the central bank stated.