The Reserve Bank of India (RBI) has issued a directive to Kotak Mahindra Bank, mandating an immediate halt to new customer onboarding via online and mobile banking channels, along with the suspension of fresh credit card issuance. However, existing customers, including credit card holders, will continue to receive uninterrupted services.
The RBI’s decision follows a thorough IT examination of the bank for the years 2022 and 2023, revealing significant concerns regarding IT risk and information security governance. Despite regulatory guidelines, Kotak Mahindra Bank was found lacking in its IT infrastructure for two consecutive years and failed to promptly address these issues.
Frequent and substantial outages were observed in the bank’s core banking system and digital channels, with a notable disruption occurring on April 15, 2024, resulting in customer inconvenience. The RBI emphasized that the bank’s failure to enhance its IT systems and controls in line with its growth has led to notable deficiencies in operational resilience.
In its statement, the RBI highlighted, “These actions are necessitated based on significant concerns arising out of Reserve Bank’s IT Examination of the bank for the years 2022 and 2023 and the continued failure on the part of the bank to address these concerns in a comprehensive and timely manner.”
