In a significant move citing data security apprehensions and operational deficiencies, the Reserve Bank of India (RBI) has implemented strict curbs on Kotak Mahindra Bank. Effective immediately, the bank is prohibited from enrolling new customers through its online platforms and issuing fresh credit cards. However, existing customers, including those with active credit cards, will continue to receive services uninterrupted.
The RBI invoked its authority under Section 35A of the Banking Regulation Act, 1949, to instruct Kotak Mahindra Bank to halt the onboarding of new customers via online and mobile banking channels, along with ceasing the issuance of new credit cards.
The regulatory action comes on the heels of the RBI’s IT examination of the bank for the years 2022 and 2023, revealing concerning inadequacies in the bank’s IT infrastructure. Despite repeated alerts and directives from the RBI, Kotak Mahindra Bank allegedly failed to address these issues adequately and promptly.
This development underscores the RBI’s unwavering commitment to safeguarding the integrity and security of India’s banking ecosystem. While the restrictions pose immediate challenges for Kotak Mahindra Bank’s growth prospects, they serve as a reminder for all financial institutions to prioritize robust IT infrastructure and data security measures in an increasingly digitized banking landscape.
