RBI Bars Kotak Mahindra Bank From Issuing New Credit Cards, Digital Onboarding Of Customers

New Delhi: The Reserve Bank of India (RBI) has directed Kotak Mahindra Bank Limited to stop the onboarding of new customers through its online and mobile banking channels, as well as the issuance of fresh credit cards.

This action comes as a result of significant concerns raised during the RBI’s IT examination of the bank for the years 2022 and 2023. Despite ongoing efforts, the bank has not adequately addressed these concerns in a timely manner.

The RBI has identified serious deficiencies in various areas, including IT inventory management, patch and change management, user access management, vendor risk management, data security, and business continuity. These deficiencies have led to frequent outages in the bank’s Core Banking System (CBS) and digital channels over the past two years, causing inconvenience to customers.

The bank’s non-compliance with corrective action plans issued by the RBI, coupled with its failure to build necessary operational resilience, has prompted the apex bank to impose business restrictions. Existing customers, however, will continue to receive services, including credit card facilities.

The RBI stressed the importance of the bank undertaking a comprehensive external audit to address these deficiencies satisfactorily. The restrictions will remain in place until remediation is completed to the satisfaction of the RBI.