RBI Bars Kotak Mahindra Bank From Issuing New Credit Cards, Adding Customers Online


The Reserve Bank of India on Wednesday directed Kotak Mahindra Bank to cease and desist issue of fresh credit cards and onboarding of new customers through its online and mobile banking channels, with immediate effect.

The actions against the private lender was based on significant concerns on RBI’s IT examination for 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner, according to a statement.

“For two consecutive years, the bank was assessed to be deficient in its IT Risk and Information Security Governance, contrary to requirements under Regulatory guidelines,” the statement said.

The central bank noted that the bank’s core bank system and its online channels suffered frequent outages in the two years, the recent one being a service disruption on April 15, 2024, resulting in serious customer inconveniences.

This comes at a time when there has been rapid growth in the volume of the bank’s digital transactions, including transactions pertaining to credit cards. The private lender’s credit card portfolio rose 52% on a yearly basis to Rs 13.8 crore in the third quarter.

The incremental growth of onboarding new customers will be significantly effected and not the existing growth, according to TGC AMC’s Managing Director Chakri Lokapriya told NDTV Profit.

“The bank is found to be materially deficient in building necessary operational resilience on account of its failure to build IT systems and controls commensurate with its growth,” RBI noted.

This is a developing story.



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