RBI cubs on Kotak Mahindra Bank

The Reserve Bank of India (RBI) has directed Kotak Mahindra Bank to stop onboarding new customers through its online and mobile banking channels and issuing new credit cards with immediate effect on Wednesday.The bank can, however, continue to serve its current customers, including those holding credit cards.The Reserve Bank of India (RBI) has taken these measures against the bank due to concerns raised during the central bank's IT examinations in 2022 and 2023.The RBI has taken supervisory action against Kotak Mahindra Bank Limited under Section 35A of the Banking Regulation Act, 1949.
"Serious deficiencies and non-compliances were observed in the areas of IT inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and disaster recovery rigour and drill, etc. For two consecutive years, the bank was assessed to be deficient in its IT Risk and Information Security Governance, contrary to requirements under Regulatory guidelines," said RBI.Despite receiving corrective action plans from the RBI for both 2022 and 2023, subsequent evaluations revealed non-compliance by Kotak Mahindra Bank. The bank's submissions regarding compliance were deemed insufficient, inaccurate, or unsustainable.The RBI noted that due to the absence of a robust IT infrastructure, the bank's digital banking channels have suffered frequent outages and inconvenienced customers.