Reserve bank of India on Kotak Mahindra, April 2024

• Reserve Bank of India on Kotak Mahindra Bank

• Impact on Kotak Mahindra Bank customers

Reserve Bank of India on Kotak Mahindra Bank

On April 15, 2024, the Reserve Bank of India (RBI) took significant action against Kotak Mahindra Bank due to concerns related to its IT infrastructure and information security practices. Here are the details:

1. Restrictions on Digital Onboarding:
   • The RBI barred Kotak Mahindra Bank from onboarding new customers through online and mobile banking channels.
   • This action was taken because the bank’s Core Banking System (CBS) and its digital banking channels had frequent and significant outages over the past two years, including a service disruption on April 15, 2024.
2. Ceasing New Credit Card Issuance:
   • In addition to digital onboarding restrictions, the RBI directed the bank to stop issuing new credit cards.
   • These measures were implemented due to serious deficiencies and non-compliances identified by the RBI in IT inventory management, patch and change management, user access management, data security, and more.
3. Background and Regulatory Compliance:
• The RBI’s Statutory Inspection for Supervisory Evaluation (ISE 2022) revealed several non-compliances by Kotak Mahindra Bank.
• These included failure to conduct annual reviews of service providers, improper interest levies, and non-compliance with corrective action plans issued by the RBI in previous years.

Impact on Kotak Mahindra Bank customers

The recent RBI restrictions on Kotak Mahindra Bank have raised concerns among customers. Let’s break down the impact:

1. Existing Customers:
   • No Disruption: Existing customers, including those with Kotak 811 digital accounts, can continue accessing their accounts without interruption. They can use Internet Banking or the mobile banking app.
   • Services Unaffected: Current savings or account holders won’t experience any service disruption. All banking facilities, including credit cards and online banking, will continue as usual.
2. New Customers:
   • Online Account Opening: New customers won’t be able to open Kotak 811 digital savings accounts due to the RBI’s restrictions on online customer onboarding.
   • Branch Account Opening: Despite the online ban, Kotak Mahindra Bank can still onboard new customers through its bank branches. Individuals interested in opening an account can visit their nearest branch.
3. Credit Card Services:
   • Existing Cardholders: Existing credit cardholders can renew their cards without issues.
   • New Cards: However, the bank is not permitted to issue new credit cards until the RBI lifts the restrictions