Kotak Mahindra Bank
– Photo: Kotak Mahindra Bank
Expansion
Banking sector regulator Reserve Bank of India has taken major action against Kotak Mahindra Bank. RBI has banned banks from adding new customers and issuing credit cards through online or mobile banking channels. However, the regulator has said in its direction that it can continue to provide services to its existing customers including credit card customers.
What reason did RBI give for taking action against Kotak Mahindra Bank?
According to the Reserve Bank, this action has been taken after finding flaws in the IT risk management and information security administration of Kotak Mahindra Bank. RBI has said in its statement that these actions have been taken on the basis of flaws found in the IT audit of the bank by the regulator during the year 2022 and 2023. The regulator said the bank had failed to address significant concerns arising after the test in a comprehensive and timely manner.
What irregularities did RBI find in the investigation of Kotak Mahindra Bank?
The RBI statement said that the bank's IT inventory management, patch and change management, user access management, vendor risk management, data security and strategy to prevent data leaks were found deficient. According to the central bank, there are serious deficiencies and lack of compliance in areas such as strictness and drills for the bank's business continuity and disaster recovery. The Reserve Bank of India said in its statement, “The bank's IT risk and information security governance was assessed for deficiencies for two consecutive years and it was concluded that it did not meet the required requirements under the regulatory guidelines.”
What will be the impact of RBI's action on existing customers?
A large number of people in the country use the services of Kotak Mahindra Bank. In such a situation, the big question is what effect will the recent action of the Reserve Bank have on them? According to the RBI, Kotak Mahindra Bank has been directed to “discontinue” the services of adding new customers and issuing new credit cards through its online and mobile banking channels with immediate effect. However, the statement from the central bank said that the bank will be able to continue to provide services to its existing customers, including its credit card users, as before.
