RBI restricts Kotak Mahindra Bank: Halts credit card issuance, new online customers
- In Reports
- 01:14 PM, Apr 25, 2024
- Myind Staff
The Reserve Bank of India has directed Kotak Mahindra Bank to cease onboarding new customers through its online and mobile banking channels and to suspend the issuance of new credit cards. Existing customers, including those with credit cards, will continue to receive services from the bank.
In a statement issued, the Reserve Bank of India invoked its authority under Section 35A of the Banking Regulation Act, 1949, directing Kotak Mahindra Bank Limited to immediately halt the onboarding of new customers via its online and mobile banking platforms, as well as to suspend the issuance of new credit cards.
However, the bank is required to maintain services for its existing customer base, including those with credit cards.
The Reserve Bank of India identified significant deficiencies and non-compliances in various aspects of Kotak Mahindra Bank's operations, including IT inventory management, patch and change management, user access management, vendor risk management, data security, leak prevention strategy, business continuity, and disaster recovery protocols.
According to the RBI, Kotak Mahindra Bank's Core Banking System (CBS), along with its online and digital banking channels, has encountered multiple outages over the past two years.
The Reserve Bank has been engaging with the bank at a high level over the past two years to address these concerns and enhance its IT resilience. However, the outcomes have been unsatisfactory," stated the RBI. "There has also been a noticeable surge in the volume of the bank’s digital transactions, including those related to credit cards, placing additional strain on its IT systems.
"The Reserve Bank has decided to impose certain business restrictions on the bank to safeguard customer interests and mitigate the risk of prolonged outages that could disrupt efficient customer service and the financial ecosystem of digital banking and payment systems," the RBI stated in its announcement.
The restrictions will be lifted once Kotak Mahindra Bank completes an external audit, addressing any identified shortcomings to the satisfaction of the Reserve Bank and with its prior consent.
Image source: NDTV News
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