New Delhi: The Reserve Bank of India (RBI) has instructed Kotak Mahindra Bank Limited to halt the enrollment of new clients through its online and mobile banking platforms, as well as the issuance of fresh credit cards. This directive follows after RBI’s scrutiny of the bank’s IT operations for the years 2022 and 2023, which brought concerns that remain unresolved by the bank.
The RBI said that Kotak Mahindra Bank will continue to provide services to existing customers, including those holding credit cards. These actions come in response to concerns raised during the 2022-2023 IT assessments and the bank’s ongoing failure to promptly rectify them, as per the RBI’s directives.
These measures were instigated due to severe issues identified during the RBI’s examinations of the bank’s IT infrastructure in 2022 and 2023. Despite efforts to collaborate with the bank, it has not effectively resolved crucial issues pertaining to the management of its IT infrastructure. These issues encompass challenges in monitoring its IT assets, handling updates and modifications, regulating access to its systems, mitigating risks associated with its vendors, ensuring data security, and preparing for contingencies.
Due to the bank’s failure to adhere to remedial plans and its insufficient IT infrastructure, there have been numerous instances of service disruptions over the past two years. The most recent incident occurred on April 15, 2024, causing inconvenience to customers. This indicates that the bank has not sufficiently fortified its systems to accommodate its growth trajectory.
Even with guidance and support from the RBI, the bank has struggled to enhance its IT systems to cope with the escalating volume of digital transactions. This raises concerns regarding the reliability of its systems. To safeguard customers and mitigate prolonged service interruptions, the RBI has imposed temporary constraints on Kotak Mahindra Bank Limited’s operations.
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