In another similar incident earlier, the RBI had imposed a temporary ban on HDFC Bank, advising it to stop all launches of digital business generating activities.
The Reserve Bank of India (RBI) on Wednesday, April 24, directed private lender Kotak Mahindra Bank to stop onboarding new customers through its online and mobile banking channels and issuing fresh credit cards with immediate effect. To subscribe please click tau.id/2iy6f and access our live channel.
The Reserve Bank of India on Wednesday directed Kotak Mahindra Bank Ltd. to cease and desist the issue of fresh credit cards and the onboarding of new customers through its online and mobile banking channels with immediate effect as the bank had been found lacking in IT risk and information security governance for two consecutive years.
The directive comes as part of regulatory actions taken by the central bank in response to concerns regarding compliance and risk management at Kotak. However, the RBI said that the lender can continue to provide services to its existing customers, including its credit card customers.
“The RBI has today, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, directed Kotak Mahindra Bank to cease and desist, with immediate effect, from (i) onboarding of new customers through its online and mobile banking channels and (ii) issuing fresh credit cards,” as per a statement from the RBI.
Further, the RBI said that the bank didn’t manage its computer equipment, software updates, or who can access its systems well enough. It also didn’t do a good job of making sure its data was secure or planning for disasters.
For two years in a row, the lender didn’t meet the rules for how it should handle IT security. And even after being told to fix these issues, the bank didn’t do a good job of following through, as per the statement.
These actions are being taken after the central bank looked at Kotak’s IT systems for the years 2022 and 2023 and found some big problems. The lender is yet to fix those problems properly or quickly enough, the RBI said in a statement.
