RBI's Order To Kotak Mahindra Bank: No New Customers, No New Credit Cards

The Reserve Bank of India (RBI) has directed Kotak Mahindra Bank to halt the onboarding of new customers through its online and mobile banking channels, as well as the issuance of new credit cards. Existing customers will continue to receive services, including those related to credit cards, as per the RBI's order.

The RBI's decision was based on concerns arising from its IT Examination of the bank for the years 2022 and 2023, as well as the bank's failure to address these concerns comprehensively and promptly.

The central bank identified serious deficiencies and non-compliances in Kotak Mahindra Bank's IT inventory management, patch and change management, user access management, vendor risk management, data security, data leak prevention strategy, business continuity, disaster recovery rigour and drill, among other areas. The bank was found to be lacking in its IT Risk and Information Security Governance for two consecutive years.

Due to the bank's inadequate IT infrastructure and risk management framework, its Core Banking System (CBS) and online and digital banking channels have experienced frequent and significant outages over the past two years, including a service disruption on April 15, 2024, causing significant inconvenience to customers.